Venezuela's devalued its currency the bolivar by 32 percent against the US dollar on Wednesday, feeding public fears that prices would rise further amid already soaring inflation.
The change in the official exchange rate from 4.3 bolivars to the dollar to 6.3, was published in the Official Gazette. The move was announced on Friday by Planning and Finance Minister Jorge Giordani.
"Everything is operating normally," Giordani insisted on state television.
Economist Jose Luis Saboin of the consultancy Econalitica said consumers' purchasing power will likely erode by 7.2 percent this year.
Devaluation will make imports more expensive in Venezuela, where inflation stands at 20.1 percent -- the highest in Latin America, based on official data.
President Hugo Chavez's government put in place an exchange rate control mechanism in 2003 seeking to throw the brakes on capital flight. In January 2011 it set the rate at 4.3.
But the hunger for dollars and euros fuels a black market with a much higher exchange rate which by law cannot be published.
And news of the devaluation fuelled consumers' anxieties. On Tuesday, Venezuelans swamped stores to snap up everything from washing machines to plane tickets in a last-minute wave of panic-buying.
Chavez himself vanished from public view with health problems more than two months ago and Venezuela is still in suspense over its political future despite assurances its cancer-stricken president is getting better and back in charge.
The president remains in the Cuban capital Havana where he has been convalescing from a fourth round of cancer surgery.
Senior government officials, who have been shuttling between Caracas and Havana, insist Chavez is becoming more and more engaged and will return to the Venezuelan capital "sooner rather than later."
But they can't or won't say when he will return, or whether he will be able to govern, while the opposition has stepped up its demands that the president appear in public or step aside.