CARACAS—Venezuela's Socialist government, facing weeks of street protests, is loosening currency regulations as it tries to jump-start an economy plagued by shortages of food and consumer goods.

Officials say a new currency market will launch Monday with a flexible exchange rate determined by supply and demand—a rare move out of free-market textbooks. It marks the first time in four years that businesses and individuals will have a legal channel to acquire dollars outside of government agencies.

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