UPDATE 1-U.S. probe freezes Venezuela forex market -traders

(Recasts, adds "no comment" by Bank of America and DEA)

CARACAS, March 26 (Reuters) - Trade in Venezuela's unofficial currency market was largely halted on Thursday after U.S. authorities froze a key bank account used for foreign exchange transactions as part of an investigation, traders told Reuters.

Sources said an "umbrella account" at Bank of America (BAC.N) with various sub-accounts heavily used by parallel market traders was frozen on Wednesday after the U.S. Drug Enforcement Administration detected a suspicious operation.

"A judicial order was issued to freeze the assets inside the account, which affects 49 brokerages and market operators in Venezuela," said one trader.

Representative of both the DEA and Bank of America said they could not comment.

The unofficial, or parallel, currency market is used by companies and investors to skirt the Venezuelan government's fixed exchange rate on the bolivar.

The government of leftist President Hugo Chavez fixes the bolivar at 2.15 per dollar. On the parallel market, the dollar now trades near 6 bolivars.

Websites routinely used to track the parallel rate, which is illegal to publish in Venezuela, showed the bid for dollars at 6 and the ask at 7 -- a much broader spread than is traditionally seen on the market.

"Given the circumstances nobody is doing anything," said another trader. "The market is totally paralyzed, that's why the reference price is so high and and the spread so large."

The rate on the parallel market, which is mostly unregulated and difficult to closely track, closed on Wednesday between 5.85 and 6.05 bolivars per dollar.

The parallel rate is often seen as an indicator of political risk in Venezuela.

The rate soared in 2007 to nearly 7 before a referendum that would have extended Chavez's powers, and jumped last September after Chavez expelled the U.S. envoy to Venezuela. (Reporting by Ana Isabel Martinez, Additional reporting by Jim Loney in Miami; Writing by Brian Ellsworth; Editing by Leslie Adler)