Banknotes will be printed in new denominations in which one million bolivars will be exchanged for one (AFP)
In the context of hyperinflation, the highest in the world, Venezuela removed, today, Friday, 6 new zeros from its currency, adjusting the value of the bolivar for the third time in 13 years, and will print banknotes in new denominations in which one million bolivars will be replaced by one, while these papers 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 7 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, 14 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 and it’s less than $3,” 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 transactions in the country 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.
To tip a worker who parks a car in a restaurant garage, payment is required by card where the service provider receives a receipt instead of cash.
Bus stops were turned into exchange offices in the open to face the lack of liquidity, in order to ride this means of transportation, in which payment is only accepted in bolivars.
“We exchange a dollar for 4 million bolivars. The ticket (bus) costs 2 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 50 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 figures from 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 dealings, 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 digest.
(1 US dollar = 213,830,222,338.0000 Venezuelan bolivars)