Venezuela announces new foreign exchange system

Venezuela on Tuesday announced the launch of a new free-floating foreign exchange platform, in a move to ease its 12-year-old currency controls and revive the country's battered economy amid plunging oil prices.

The new platform, called the Marginal Currency System, will allow for legal trading of foreign currency based on supply and demand, but bar the strategic sectors, including food and medicines.

"The new currency exchange system we're announcing today ... will maintain the rate of 6.30 (bolivars to the U.S. dollar) for the priority sectors of food and health, for priority imports in these areas," Finance Minister Rodolfo Marco Torres said at a televised press conference in the capital of Caracas.

The controlled rate will also apply to the so-called basic basket of goods and raw materials for key productive sectors, such as construction and agriculture, he added. "Approximately 70 percent of the country's economic needs are guaranteed at the ( exchange rate of) 6.30."

The new system will be "open (and) free," said the official, with "the market setting the exchange rate."

The move is widely seen as an effort to ease tight currency controls which have been blamed for a slew of economic ills, mainly shortages of goods, and for stifling growth.

For the past 12 years, a three-tier exchange control system has been providing U.S. dollars at three different rates. The new platform will replace the third system, known as Sicad II, that used to set the rate at 52 bolivars for other goods.

The dollar fetches nearly 190 bolivars on the black market, a rate that is used as a reference for prices, distorting the national economy and leading to the region's highest inflation in 2014 of more than 65 percent.

A limit of 3,000 dollars per year for citizens who travel abroad will be maintained, the minister said. Endite