Venezuela adjusts its currency with six zeros

Venezuela adjusts its currency with six zeros
Venezuela adjusts its currency with six zeros

Caracas (AFP)

On Friday, Venezuela removed six zeros from its currency, adjusting the value of the bolivar for the third time in 13 years, in the context of hyperinflation facing the country, the highest in the world.

As part of this procedure, the country, which is facing the worst crisis in its modern history, will print banknotes in new denominations – in which one million bolivars are replaced by one – when these notes are no longer in circulation in the country.

The aim of the amendment, according to what the Central Bank announced last month, is to “facilitate” the daily transactions of about 30 million Venezuelans.

Before adjusting the value of the currency, the price of a loaf of bread was equivalent to seven million bolivars, in a country that was considered one of the richest countries in South America thanks to its oil. But also because of mismanagement and political crisis.

94.5 percent of households live below the poverty line ($1.9 a day), according to a recent university study.

According to the study, the population of Venezuela is now about 28.8 million, which means that about 5 million people have left the country due to the economic and political crisis.

Since 2008, fourteen zeros have been omitted. The new bolivar will be equivalent to 100 billion bolivars in 2007, reflecting the staggering decline of the Venezuelan currency. This, of course, led to a lack of purchasing power for wages.

“We receive our salary every two weeks, which is less than three dollars,” Marles Guerrero, 43, a teacher who earns millions of bolivars, told AFP.

To face the highest inflation rate in the world, which the Eco-Analytica think-tank estimates at 1,600% in 2021, more than two-thirds of the country’s transactions are conducted in dollars, the currency of the United States, the regime’s archenemy.

The rent for an apartment in a modest neighborhood of the capital starts at $150, and the food basket for a family of five costs about $220.

Credit cards and bank transfers are used instead of cash exchanges, and daily payments in bolivars have become very confusing.

– children’s game –

To tip a worker who parks a car in a restaurant garage, card payment is required where the service provider receives a receipt in lieu of cash.

Bus stops have turned into exchange offices in the open, in order to face the lack of liquidity, in order to ride this means of transport, in which payment is only accepted in bolivars.

“We exchange a dollar for four million bolivars. A ticket (the bus) costs two million,” said William Hernandez, a 56-year-old driver.

On the street, children play with bundles of real banknotes that have long been of little value.

The government invokes international sanctions imposed since 2019, especially by Washington, which has been seeking to oust President Nicolas Maduro since he was re-elected for a second term in 2018 in elections whose results were rejected by the opposition.

Negotiations are underway between the Chavez government led by Socialist President Maduro and the opposition led by Juan Guaido, who is considered by about fifty countries, including the United States, as interim president of the country.

And Venezuela, the former oil giant, produced 520,000 barrels of oil per day last February, according to the figures of the Organization of Petroleum Exporting Countries (OPEC), much less than the three million barrels it produced per day in 2013.

While some Caracas feared that the new currency adjustment would reduce purchasing power, others welcomed the simplification of transactions, including accountant Rodrigo Bermúdez.

“It was a relief…the number of digits made any transaction very tiring,” he commented, referring to an invoice with too many zeros to fathom.

© 2021 AFP

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