CARACAS: Venezuelan President Hugo Chavez devalued the bolivar Friday for the first time since 2005, creating a dual foreign currency system.

The move will favor some sectors of the economy the government considers priorities, with the bolivar pegged at 2.6 per dollar, down from 2.15 per dollar.

Non-essential imports will be subject to a rate of 4.3 bolivars per dollar.

The leftist leader said that the health, food import, machinery, books and technology sectors, as well as public sector imports and remittances would benefit from the preferential rate.

The higher exchange rate would apply to items such as automobiles, telecommunications, tobacco, beverages, chemicals, petrochemicals and electronics.

The largest oil producer in South America, Venezuela slipped into a recession in 2009 for the first time in six years due to a drop in oil prices and production. It is also battling 25 percent inflation.

Caracas had repeatedly ruled out devaluing its currency even as the dollar soared for months compared to the bolivar.