Suriname devalues currency by more than 20 percent amid drop in prices for its oil, gold

PARAMARIBO, Suriname – This South American country has devalued its currency by more than 20 percent, with officials blaming a drop in world prices for the oil and gold that sustain the economy.

The announcement late Wednesday by the Central Bank of Suriname sparked fears that prices for consumer goods will spike across the former Dutch colony.

The bank said its financial reserves shrank to $370 million from $1 billion in December 2012 as it tried to keep Suriname's currency pegged at 3.25 to the dollar. It will now be set at four per dollar. The Suriname dollar had been trading at 4.25 on the black market.

"Suriname is momentarily experiencing a genuine commodity shock," the bank said in a statement.

Opposition leaders called the devaluation a "smack in the face to all Surinamese" as people began lining up at gas stations Thursday to fill up their tanks before any price rise.

Surinamese regularly use euros or U.S. dollars to pay for rent, cars, food and other expenses. If a business owner does accept Surinamese dollars, customers usually are required to pay at the daily black market exchange rate.

Amanda Palis, a mother of one, said the devaluation will force her and her husband to delay construction of the house they designed.

"This means we will have to live with my parents for some more years, until we can borrow the extra 20 percent from the bank," she said.

Local economists said the government is partly to blame for the devaluation because of overspending in recent years.

President Desi Bouterse, a former coup leader and convicted drug trafficker who was inaugurated in May for a second consecutive term, has raised pensions, imposed a minimum wage and offered free health care in recent years. After he was sworn in for his latest term, he pledged to restructure Suriname's economy and lessen its dependence on commodities including gold and bauxite.

Suriname previously devalued its currency by 20 percent in 2011.