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Venezuelan government debt tumbled in local markets as people took to the streets for a fifth day to protest President Hugo Chavez's decision to pull the country's most-watched television network off the air.
Concern that protests will turn violent again led investors to sell dollar- and bolivar-denominated bonds in the local market and move money out of the country, traders said. Police have detained 182 people since May 27, the day that Chavez let the concession granted to Radio Caracas Television expire, Interior Minister Pedro Carreno said last night.
``Clearly there is the perception among investors that things could go in any direction at this point,'' said Garlina Requena, a trader with Caracas-based bank Corp Banca CA's treasury desk, in a phone interview. ``There's uncertainty in the air.''
The yield on the government's 6.25 percent dollar bond due in 2017, known as TICC, rose 18 basis points, or 0.18 percentage point, to 4.94 percent, the highest since November 17, at 4 p.m. New York time, according to Banco Bilbao Vizcaya Argentaria SA. The price, which moves inversely to the yield, dropped 1.6 to 110.20 cents on the dollar, the biggest decline since March 21.
Chavez said yesterday he won't reverse his decision to take Radio Caracas off the air and also threatened to close Globovision, an all-news network that he says is trying to instigate his assassination.
Colombian Border
University students staged demonstrations in front of the Caracas headquarters of the People's Defender Office and CA Nacional Telefonos de Venezuela, the phone company that Chavez nationalized this year. At the Universidad de los Andes campus in San Antonio del Tachira, near Venezuela's western border with Colombia, police today used tear gas to disperse marchers, mostly students, Globovision news station reported.
``Fellow countrymen, don't get violent in the streets,'' Zulia Governor Manuel Rosales, who lost to Chavez in presidential elections in December, said at a news conference in Caracas. ``Violence strips our cause of legitimacy.''
Carreno huddled last night with the mayors of Greater Caracas's six municipalities and heads of the Metropolitan Police and the National Guard to coordinate their handling of the protests. He said the police will respect people's right to protest so long as the demonstrations are peaceful and don't block traffic or threaten private property.
About 107 minors are included among those arrested for their role in allegedly violent acts this week, Carreno said.
`Touched a Nerve'
``This episode seems to have touched a nerve in the population and the degree of popular resistance seems to have caught the government by surprise,'' said Alberto Ramos, a senior Latin American economist with Goldman Sachs Group Inc. in New York. ``The demonstrations have also brought to the surface the deep polarization of the Venezuelan society which could generate further bouts of market volatility in the weeks ahead.''
The yield on the government's 9.5 percent bolivar- denominated securities due June 2012 jumped 20 basis points to 5.36 percent, according to U21 Casa de Bolsa CA. The price fell 1 to 118 centavos, the lowest in a week.
The currency strengthened 2.5 percent to 4,050 bolivars per dollar in the parallel market, reversing earlier losses, according to traders in Caracas. The currency has lost 19 percent of its value against the dollar this year.
Venezuela pegs the bolivar at an official exchange rate of 2,150 bolivars per dollar under restrictions imposed by Chavez in February 2004. Venezuelans turn to unregulated markets when they can't get approval from the government's Foreign Exchange Administration Commission to buy dollars at the official exchange rate.
Increased daily sales by the commission, known as Cadivi, are supporting the bolivar in the parallel market, Requena said. Cadivi data showed that approvals for daily sales rose to an average $209 million this month from $117 million in April.
