UPDATE 1-Chavez says new forex rate "not far" above 4.3/dlr

CARACAS, May 20 (Reuters) - Venezuela's new foreign exchange rate to be set by the Central Bank should not be much above the highest current official rate of 4.3 bolivars to the dollar, President Hugo Chavez said on Thursday.

The central bank is taking over a "parallel" currency market, previously in private hands, where the bolivar had bombed to more than 8.0 to the dollar this year.

The bank is to establish a new band for the bolivar, depending on local supply and demand, and using international bond prices as a reference, officials have said.

"It won't be much above 4.3, right?" Chavez said in a televised meeting with his economic team.

"It will be around there, very close."

This week's state takeover of the hitherto free-floating "parallel" market effectively creates three officially controlled currency rates in the South American OPEC member nation.

The state provides dollars at 2.6 bolivars for essential items like medicines, and also has had another rate of 4.3 bolivars since a January devaluation.

The "parallel" rate had sprung up due to restricted access to dollars at the other two levels, but now that too will be in government hands. Analysts predict a black market will spring up quickly. (Reporting by Andrew Cawthorne, editing by Anthony Boadle