UPDATE 1-New Venezuela forex band unchanged on day two

* Government wants to halt depreciation, capital flight

* Market worried about dollar shortages, distortions (Adds details, background)

By Eyanir Chinea

CARACAS, June 10 (Reuters) - The price band for Venezuela's bolivar currency on a new foreign exchange market was unchanged on Thursday at between 4.3 and 5.3 to the U.S. dollar on its second day of trading.

Venezuela launched the new tightly regulated system on Wednesday in the latest effort by President Hugo Chavez's socialist government to steady the economy. [ID:nN09140358]

Since taking office 11 years ago, Chavez has created a multilayered system of currency controls and greatly increased the Latin American government's role in the economy with widespread nationalizations.

Critics say the latest level of regulation will slow the flow of dollars needed for the imports that make up most of the country's consumer items, fueling already sky-high inflation and possibly producing shortages.

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Full coverage of Venezuela's economic woes [ID:nVENEZUELA]

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The market replaces an unregulated, free-floating "parallel" exchange where the local currency VEF= had tumbled in value to more than 8.0 against the dollar this year.

The central bank had said almost all trades on Wednesday were close to 5.3 per dollar.

The government provides some dollars at fixed rates of 4.3 and 2.6, but not enough to meet demand.

Many importers had previously turned to the old parallel market but authorities shut that system down on May 18, accusing speculators of undermining the local currency.

Lower oil prices and production have created a tight supply of dollars, while 31 percent annual inflation and economic turmoil boost demand, piling downward pressure on the bolivar. (Writing by Daniel Wallis, Editing by W Simon ) )