Oct. 23 (Bloomberg) -- Venezuela's bolivar fell to a 10- month low in the parallel, unregulated market as a collapse in oil, the country's biggest export, fueled speculation the government will devalue the currency.

The bolivar has plunged 44 percent since mid-August to 5.9 per dollar amid concern the decline in oil will leave President Hugo Chavez with a cash shortfall after he boosted spending more than threefold in the past five years. Speculation is building that Chavez will devalue the 2.15-per-dollar official exchange rate after local elections in November to squeeze more bolivars out of each dollar of oil receipts and close that funding gap.

``Fears of a devaluation are causing people to exit their positions and seek foreign currency,'' said Yumar Rosada, a trader at Finacorp. Valores Casa de Bolsa CA in Caracas. ``People are making nervous purchases.''

The bolivar slid 2.5 percent today in parallel market trading from 5.75 per dollar yesterday, traders said. It traded at 3.33 on Aug. 14. Venezuelans turn to the parallel market when they can't get permission from the government to buy currency at the 2.15-per-dollar official rate.

Venezuela, the biggest oil exporter in the Americas, gets about half its fiscal revenue and more than 90 percent of its export receipts from crude. Oil has dropped 54 percent from a record high in July as the global financial crisis has crimped economic growth in the world's biggest economy. Oil for December delivery rose 0.8 percent today to $67.52 a barrel at 2:15 p.m. on the New York Mercantile Exchange.

Budget Deficit

Chavez, 54, will devalue the official exchange rate 26 percent next year to 2.7 per dollar, according to the median forecast in a Bloomberg survey of nine analysts.

The government's 2009 budget doesn't call for a devaluation, Finance Minister Ali Rodriguez said on Oct. 21. Chavez has said Venezuela has enough foreign reserves and savings to pull through the drop in oil revenue.

Venezuela will post a budget deficit equal to 3.9 percent of gross domestic product next year even if oil rebounds to $80 a barrel, Boris Segura, a Latin America economist at Morgan Stanley in New York, wrote in a research note. He forecasts the government will have a surplus equal to 0.8 percent this year.

To contact the reporter on this story: Matthew Walter in Caracas at mwalter4@bloomberg.net; Daniel Cancel in Caracas at dcancel@bloomberg.net.

Last Updated: October 23, 2008 14:44 EDT