Nov. 3 (Bloomberg) -- Venezuelan Central Bank President Nelson Merentes said the country remains committed to shoring up the bolivar in the unregulated market even after its efforts to boost the currency in the past month failed.

The bolivar has weakened 6.1 percent since Oct. 8, when Merentes first said the country was seeking to reduce the gap over the official exchange rate to 60 percent. State oil company Petroleos de Venezuela SA sold $3.26 billion of bonds in the local market in the past month in a bid to bolster the currency. The dollar buys 5.75 bolivars in the unregulated market today, 167 percent above the 2.15-per-dollar official rate.

“We want to lower it more, much more, so that the difference is at a maximum of 60 percent by the end of the year,” Merentes, 55, said in an interview yesterday after addressing the congressional finance committee. He declined to say what new measures the government will take to strengthen the currency because “the market would anticipate them.”

Venezuela, the biggest oil producer in Latin America, is trying to strengthen the bolivar to lower import prices and curb 29 percent annual inflation, the highest rate among 78 economies tracked by Bloomberg. President Hugo Chavez first publicly recognized the unregulated market in August and stepped up the sale of dollar-denominated bonds to meet local demand for foreign currency.

Under restrictions imposed by Chavez in 2003, the government controls the sale of dollars at the official exchange rate. Companies and people who can’t get government authorization to buy at the official rate turn to the parallel market for dollars.

PDVSA Bond Sale

The central bank has overseen about $11.3 billion of bond sales from the government and PDVSA, as the oil company is known, this year to meet demand for dollars in the local market. It hasn’t received new requests for debt sales, Merentes said. Further requests “probably could” arrive, he said, without giving further details.

PDVSA is considering another bond sale in the short term, company President Rafael Ramirez told reporters during a conference today in Porlamar, Venezuela.

The extra yield investors demand to own Venezuelan dollar bonds instead of U.S. Treasuries swelled to the biggest in two months after the announcement. The so-called spread widened 14 basis points to 9.96 percentage points at 3:41 p.m. in New York, according to JPMorgan Chase & Co.

‘More Supply’

“Whenever there are announcements of new issues, they’re not well received,” said Alejandro Grisanti, an economist at Barclays Plc in New York. “It doesn’t appear that the government will stop there. I’d expect more supply after December.”

Grisanti estimates PDVSA may sell $3 billion of bonds due in 2014, 2015 and 2016 before yearend. Between the government and PDVSA, debt sales may total $12 billion in 2010, he wrote in a report last week.

The government slashed dollar sales at the official rate to individuals and companies early this year after oil plunged, sending more importers into the parallel market, swelling the gap between the two exchange rates and sparking inflation.

The government will try to lower the inflation rate to between 20 percent and 22 percent by 2010, Merentes said.

To contact the reporter on this story: Jose Orozco in Caracas at jorozco8@bloomberg.net; Daniel Cancel in Caracas at dcancel@bloomberg.net

Last Updated: November 3, 2009 15:47 EST