BY FRANCES ROBLES

                      CARACAS - The Venezuelan bolivar lost a little more than 19 percent of its value Wednesday, the first
                      day the government enacted a free-floating exchange rate, causing a rush on dollars at local banks.

                      The government did away late Tuesday with a 5-year-old system that kept the currency within a fixed
                      range. Facing dropping oil prices and a rising deficit, President Hugo Chávez said the move was
                      necessary to stem the extraordinary capital flight seen here in recent months.

                      The bolivar, which began Wednesday at 792 to the dollar, closed at the official rate of 980, though
                      some commercial banks pegged the bolivar at 1,027.

                      While economists agreed it was a necessary move, they expect devaluation will lead to soaring
                      inflation, fueling growing anti-Chávez sentiment in the country. The measure was embraced by
                      investors but deplored by Venezuelans, whose money was suddenly worth significantly less.

                      ''Today we woke up 30 percent poorer,'' said Oscar Meza, an economy advisor to labor unions.

                      Central Bank officials declined to comment Wednesday. Chávez had said the change was needed in
                      part to offset a six trillion bolivar budget deficit caused largely by falling oil prices. Venezuela, one of the
                      country's leading oil producers, depends heavily on oil sales for its federal spending.

                      This year's budget, Chávez explained, was drafted last year when prices were significantly higher.

                      Venezuela's economic outlook has worsened in recent months as billions left the nation's banks. Jittery
                      investors and private citizens have moved their capital outside the country, largely in reaction to
                      political instability here.

                      Protests have become commonplace in Caracas, where two military officers recently caused a scandal
                      by publicly calling for the president to step down. Thousands of people rallied in their support.

                      ''Floating the bolivar isn't enough to put the brakes on all this,'' said economics professor Orlando
                      Ochoa. ``It was a correct move, but Chávez makes it so it's not very convincing. It's too mediocre a
                      measure to generate the trust he's looking for from investors.''

                      Ochoa stressed that Chávez's budget proposals are inflated, and that the crisis is worse than he
                      suggests.

                      The International Monetary Fund said it was encouraged by the new policy. But others were surprised
                      Chávez did not do something more drastic and controversial, like limiting the amount of money that can
                      leave the country.

                      Some banks refused to sell dollars Wednesday until the fluctuating price stabilized. Many exchange
                      houses ran out of cash and issued checks instead. And while exchange houses were packed, reaction
                      there was mixed.

                      ''It's not worth having bolivars anymore,'' said Ingrid Hernández Cova, in an hour-long line to change
                      money in downtown Caracas. ``The instability is too serious. I'm changing all I can.''

                      Meza, the labor union advisor, said the move will push inflation up 25 percent to 30 percent and
                      exacerbate Chávez's already confrontational relationship with organized labor. Chávez has clashed
                      with unions over proposed civil service laws; they have lashed back by announcing a strike later this
                      month.

                      ''If we negotiated for months for a 20 percent raise and we have a 30 percent drop in one day,'' Meza
                      said, ``then what are we doing?''