UPDATE 3-Venezuela launches first auction of new forex system
* First sale offers $200 million to local businesses
* New mechanism effectively extends bolivar devaluation
* Auction price range to be announced on Wednesday
By Eyanir Chinea and Andrew Cawthorne
CARACAS, March 25 (Reuters) - Venezuela offered $200 million to local businesses on Monday in the first auction of a new foreign currency system that will bring another partial devaluation of the bolivar.
The South American OPEC member's socialist government devalued the fixed rate of the local bolivar currency from 4.3 to 6.3 against the dollar last month.
Monday's formal launch of the previously-announced Complementary System for Foreign Currency Administration (Sicad) sets up a parallel mechanism for businesses unable to cover all their dollar needs at that rate via state currency board Cadivi.
Companies have to bid for dollars at a minimum price of 6.3, and private economists estimate the greenback will go for nearer 10 bolivars under the new system run by the Central Bank, Finance Ministry and state oil company PDVSA.
Bids will be made on Tuesday and results given on Wednesday.
The government's intention is to both improve the supply of dollars, mainly to importers, and combat an illegal black market where the greenback goes for four times the official rate.
The dollars come from PDVSA'S exports.
Analysts say the new system should help Venezuelan bond prices by easing the need for new issuance - a common practice in the past few years when the government fed a previous exchange system via new debt.
"The news should be good for bonds, as the new mechanism implies the supply of dollars will come from oil export revenues and not from external bond issuance by the republic or PDVSA. Bond issuance going forward should be determined by financing needs and not used as a mechanism to provide dollars," RBS said.
"On the other hand, the decision implies additional currency depreciation and is likely to have an impact on inflation."
The minimum amount that could be offered in this week's auction is $30,000, the Finance Ministry said, announcing the rules. Money will not go into local businesses' hands but be adjudicated to suppliers abroad once goods arrive.
The measure may help the government of acting President Nicolas Maduro to ease import bottlenecks caused by a lack of dollars as he heads into an April 14 election triggered by the death of Hugo Chavez earlier in March.
Maduro's administration hopes the new mechanism will improve supplies of products such as medicine in the import-dependent OPEC nation that operates a tightly controlled currency control system created by the late socialist leader.
Venezuela has had five devaluations in the last decade.
Critics say the decade-long currency controls create ample opportunities for corruption by allowing well-connected Venezuelans to buy at the official rate and resell dollars on the black market for quick profit.
One private think-tank, Ecoanalitica, estimated last year that about 27 percent of dollars awarded for imports - some $15 billion - were fictitious.
Businesses have complained for years about restrictions on access to foreign currency. The government argues that it is obliged to maintain controls to counter speculative trading.
The opposition's candidate in the April 14 election, Henrique Capriles, has been railing against Maduro for hitting Venezuelans' pockets with precisely the sort of economic "package" normally derided by leftists.
"This new exchange system is another devaluation. That's the hidden reality. Who will suffer most? The poor, because of price rises," Capriles told Reuters in an interview last week.
The Finance Ministry said the profit from any sales of dollars above 6.3 bolivars would go to a special fund called the National Oil Profit Fund. Oil Minister Rafael Ramirez has said separately those funds would be used to finance local productivity and diversify the economy.
It was not clear how frequent the new Sicad auctions would be, though authorities have said they still expect Cadivi to continue providing 90 percent of dollar needs.
"The question here is how often will the central bank run these auctions and whether the amount on offer will be increased," said Goldman Sachs analyst Alberto Ramos.
"This is certainly a devaluation for those that are denied dollars at the official rate at Cadivi and have to go instead to the Sicad. We will know Wednesday the rate at which those dollars were sold. I would venture close to 10 bolivars."
Mark Weisbrot, an economist at the Washington-based Center for Economic and Policy Research in Washington whose analyses often run counter to Wall Street consensus on Venezuela, said the new system looked like an improvement.
"If it is managed correctly it could get rid of the shortages that Venezuela has had lately that are due to lack of dollar availability for importers," he said.
"It is not clear that it will increase inflation, because a lot of the dollars obtained under this system will be substituted for black market dollars, which are more expensive."
In a further modification of the price control scheme, the government published new regulations on Monday allowing a limited use of dollar bank accounts in Venezuela.