* Acting President Maduro faces April 14 election
* Will "increase availability of foreign exchange" -govt
* Opposition leader says government is "trapped"
By Brian Ellsworth and Deisy Buitrago
CARACAS, March 19 Venezuela vowed on Tuesday to
provide more dollars to importers through a new foreign exchange
system, but officials gave only vague details of how it will
work and skirted around key issues including what the rate would
The measure appeared to be an attempt by 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.
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.
But the move would almost certainly require selling dollars
at a rate higher than the official rate of 6.3 bolivars -
constituting a politically hazardous devaluation that could
further spur one of the region's highest inflation rates.
"We are going to increase the availability of foreign
exchange," Finance Minister Jorge Giordani told a news
conference. The new system, he added, would guarantee the
"absolute transparency of the distribution of currency."
Statements by Giordani and the central bank president,
Nelson Merentes, suggested the mechanism would sell dollars for
more than the official rate, but less than the black market rate
of about four times that.
But they declined to answer repeated questions by reporters
as to how much the dollars would sell for, and said they had not
determined how many would be sold or how often.
"The auction will be defined by some parameters, which are
explained in the document that will be published ... it has to
be something democratic and open but with a cap," Giordani said.
Such a mechanism appears to be similar to one based on bond
swaps that the government scrapped in February, in which the
exchange rate was effectively fixed.
Analysts said the new system raised the possibility of an
exchange rate in some way driven by supply and demand.
"Nonetheless, if the government tries imposing a low
ceiling, it will be fixing a second exchange rate," Barclays
Capital said in a research note. "Meanwhile, it is likely to
have a maximum limit that companies could demand."
Venezuela devalued its currency by 32 percent last month in
the fifth such move in a decade under Chavez's rule. Critics
were already complaining on Twitter that the new mechanism
constituted a second devaluation in just six weeks.
Maduro said on Monday the new system would help lower the
parallel rate, which has been a key factor in pushing up
consumer prices. At about 20 percent a year, Venezuela's
inflation is one of the highest in the region.
Merchants frequently mark up prices in response to shifts in
the volatile parallel exchange rate, which has weakened
considerably since last year during a period when there has been
a lack of greenbacks.
Critics say the decade-long currency control system creates
ample opportunities for corruption by allowing well-connected
Venezuelans to buy dollars at the official rate and resell them
on the black market for a quick profit.
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.
Speaking to Reuters during a campaign tour in southern
Venezuela, opposition leader Henrique Capriles said the
government was trapped but did not want to admit it.
"So they're doing everything in a more tangled way. They
tell people there are currency controls, but they have the
parallel market ... in the end, they'll come back and order
another devaluation. That's the hidden reality," Capriles said.
"It makes me laugh that the International Monetary Fund gave
its blessing, congratulated them (on last month's devaluation),"
he added. "Of course, they (government) kept quiet about that,