Venezuela to relax currency controls amid economic crisis

Venezuela's socialist government on Thursday relaxed strict controls that for years have limited currency exchanges, choking an economy that's in a historic freefall.

The ruling party's National Constitutional Assembly voted to legalize certain transactions in currency exchange houses.

The changes fall under President Nicolas Maduro's recently announced economic plan to combat the rampant black market and rescue the economy from soaring inflation.

Maduro has said that on Aug. 20 Venezuela will lop five zeros off its paper money to combat inflation along with the easing of the currency controls.

The currency move, however, drew criticism from opposition lawmakers.

"The government does not intend to form a 'traditional' transparent exchange," Angel Alvarado, a deputy in the National Assembly, said on Twitter. "The foreign exchanges will be for the well-connected few at a bargain price that can be sold in a free market."

A once-wealthy oil country, Venezuela's economy is crumbling in a five-year recession following two decades of socialist rule and plummeting crude production.

Venezuela's soaring inflation is predicted to top 1 million percent by the end of the year, economists at the International Monetary Fund recently predicted.

The country's economic turmoil compares to Germany's after World War I and Zimbabwe's at the beginning of the last decade, IMF officials said, adding that Venezuela's economic contraction ranks among the world's deepest in six decades.

The late-President Hugo Chavez put the strict currency exchange controls in place 15 years ago.

Diosdado Cabello, Venezuela's chief socialist and president of the Constituent Assembly, proposed the draft bill, which members of the Constitutional Assembly approved with a rousing applause.

"The sensible thing is to do at this moment is to accompany the president's proposal," Cabello said.