October 19, 2021

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Venezuela removes six zeros from its currency and dissolves due to high inflation

The official price of the dollar Venezuela It went from 4.18 million bolivars on Thursday to 4.18 on Friday. The miraculous recovery of the coin Venezuela? No … Caribbean country, sunk High inflation, Six zeros were removed to facilitate operations.

“Everything expressed in the national currency is divided by one million,” the central bank said Venezuela (BCV) When announcing the third change this country has been in crisis since 2008, a total of 14 zeros were removed from Bolivar in 13 years.

With this move, which took effect this Friday, a new currency cone goes on the street: a Bolivar coin and 5, 10, 20, 50 and 100 bills. BCV rates that are equivalent to a maximum value of about $ 24.

The old family’s biggest bill, a million, represents 25 cents on the dollar and does not buy even a candy. It will be in circulation with newcomers for a few months.

The situation “reflects the limited potential that existed for economic actors Venezuela To control high inflation, “one event” has greatly impoverished the population, “he said. AFP Luis Arturo Barcenas, economist at Ecoanalytica.

Three out of every four Venezuelan families are living in poverty and do not have enough income to meet their nutritional needs, according to the results of the Integrated National Living Conditions of One of the country’s leading universities released on Wednesday.

Bolivar’s first reform was initiated by the late former president Hugo Chavez, Who removed three zeros from the coin. His heir, Nicolas MaduroStarted a new one in 2018 with five less zeros and now takes six more zeros from the equation three years later.

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Ecoanalítica has emptied the polio of value by 73.34% this year alone, combined with inflation, devastation and massive devaluation and sustainable depreciation estimated at 1,600% by 2021.

All of this led to the informal dollarization as Venezuelans tried to protect their income by using the foreign currency that Maduro called the “escape valve” in a country that had been in recession for eight years.

Nervousness

24 hours before the change, the dollar rose on the black market, which appeared to be the answer to the exchange restrictions, although the official BCV price remained stable. Parallel exchange rates rose from 4.3 million bolivars to more than 5 million dollars.

Fearing operational problems due to the change, many businesses Caracas Limited transactions BolivarsDebit cards or bank transfers are high due to lack of cash.

The Maduro government has called for peace. “(Bolivar) is not going to be overvalued, it will not be undervalued, it’s just a monetary amount, removing six zeros to facilitate transactions,” Vice President Delcy Rodriguez said Monday.

When referring to the changed Bolivar, Maduro speaks of the “digital Bolivar”, calling for a total “digitalization” of payments.

AFP

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