* Central banks says 90 pct of trades at 5.3 to dollar
* New market aims to stop depreciation, capital flight
* Critics warn of dollar shortages, economic distortion
* Some investors see buying opportunity as bonds weaken (Recasts with central bank, analyst comments)
By Ana Isabel Martinez
CARACAS, June 9 (Reuters) - Venezuela launched a tightly regulated currency market where the bolivar traded at 5.3 per U.S. dollar on Wednesday in the latest effort by President Hugo Chavez's socialist government to steady the economy.
Authorities in South America's top oil exporter want to halt the depreciation of the bolivar and stem capital flight as they battle recession and high inflation ahead of legislative elections in September.
Since taking office 11 years ago, Chavez has created a multilayered system of currency controls and greatly increased the government's role in the economy with widespread nationalizations.
Critics say the latest layer of regulation will slow the flow of dollars needed for the imports that make up most of the OPEC nation's consumer goods, fueling already sky-high inflation and possibly producing shortages.
The market replaces an unregulated, free-floating "parallel" exchange where the local currency
"A little bit more than 90 percent (of trades) pushed the upper limit," Merentes told local radio. He said $17 million had been offered to the market on Wednesday, with demand lower as participants adjusted to the new system.
Traders had earlier calculated the band to be between 4.2 and 5.4 bolivars on the market, which functions via trades of Venezuelan Global and PDVSA bonds.
The government provides some dollars at fixed rates of 4.3 and 2.6, but not enough to meet demand. Many importers previously turned to the parallel market but authorities shut it down on May 18, accusing speculators of undermining the bolivar.
Eurasia Group analyst Patrick Esteruelas said the new forex market was likely to be beset by problems from the start due to the government's apparent unwillingness and likely inability to supply enough dollars to meet pent-up demand.
"The new system is therefore likely to be a poor substitute for the old parallel market and will result in growing foreign exchange and price distortions that will further undermine growth," Esteruelas wrote in a research note on Wednesday.
The central bank had promised to publish the price band every day on its website but on Wednesday only released a list of reference prices for internationally traded Venezuelan bonds. The system uses those bonds to establish a daily price band for the bolivar.
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