A million bolivars become one as Venezuela recalibrates battered currency

For the third time in 13 years, Venezuela on Friday will slash zeros off its inflation-battered currency, the bolivar. This time, it will shed six zeros, for a total of 14 since 2008. With that, a million bolivars will overnight become one – still the equivalent of about US$0.25. Venezuela’s central bank announced the move last month to simplify transactions, with consumers scrambling to make payment for even the most basic goods or services. Seven 1-million bolivar notes – the highest denomination and very hard to come by – are required to pay in cash for one loaf of bread in the once-rich oil-producing nation now battling the highest inflation in the world. Venezuela’s GDP has plummeted by 80 per cent since 2013 as the oil price crashed and output dwindled during decades of underinvestment and mismanagement by successive socialist governments. Teacher Marelys Guerrero, 43, is one of the many Venezuelans who receives a salary in the millions of bolivars that are worth nothing. “We earn, fortnightly, less than US$3,” she said in Caracas. Rent for an apartment in a modest suburb of the capital starts from about US$150, while a basket of basic groceries for a family of five costs about US$220. In battle over gold, UK backs Juan Guaidó as Venezuela’s president Most payments in bolivars are done by debit card or bank transfer, but seventy per cent of transactions are now conducted in dollars, according to private sector estimates, and prices on many shop shelves are displayed in the US currency, to keep things simpler. On Friday, Venezuela becomes the South American country to have removed the most zeros from its currency. It lost three in 2008 under now-deceased President Hugo Chavez, whose successor Nicolas Maduro eliminated five more in 2018. The bolivar is now worth so little that children use it for play money. In Venezuela’s border regions, besides the dollar, it is common to also pay for goods in Colombian pesos or Brazilian reais, and even grams of gold. In the rest of the country, cash is used almost exclusively for purchasing public transport tickets, but even this presents a headache as notes are scarce and can only be obtained by standing in long queues at the bank. “I’ll buy your dollar!” children with thick wads of bolivar bills yell at buses that, along with bus stops, have become informal currency exchange offices. “We pay one dollar for 4 million bolivars. The fare costs 2 million,” said William Hernandez, a 56-year-old bus driver. The government will issue new banknotes in denominations of five, 10, 20, 50 and 100 bolivars, as well as a one-bolivar coin after Friday’s change. US warns Venezuela and Cuba to turn away ‘armed Iranian ships’ But the government has also said that it wants the economy to become entirely digital, a move, experts say, is meant to avoid printing money that will just continue devaluing. “If inflation behaves as it has in recent months, it is very likely that in about three or four years the government will have to reconvert again,” said Luis Arturo Barcenas of economic consultancy Ecoanalitica. The bolivar has lost nearly all its value in just over a decade – shedding almost 73 per cent in 2021 alone. The country’s annual budget of 115 billion bolivars in 2007 – then the equivalent of US$50 billion – if held in bolivars, would be worth less than US$1 today. Venezuela is battling its eighth year of recession as well as hyperinflation that reached nearly 3,000 per cent in 2020 and more than 9,500 per cent the year before, according to central bank figures. Ecoanalitica expects the number to hit 1,600 for 2021. In May, the government tripled the minimum monthly wage but the new amount was not enough even to buy a kilogram of meat. Three in four Venezuelans today live in extreme poverty, according to an academic study published Wednesday, with the economic collapse was worsened by the coronavirus pandemic. Chinese-Venezuelans desperate to stay in China amid new visa restrictions Millions have left the country in recent years to try their luck elsewhere, but many have ended up as refugees. While consumers like Guerrero fear Friday’s readjustment of the bolivar could further squash their pocket with shopkeepers rounding up prices, others like Caracas accountant Rodrigo Bermudez welcome the change. “It’s a relief … The number of digits was making everything very cumbersome,” he said, showing an invoice with too many zeros to make any sense of.

A million bolivars become one as Venezuela recalibrates battered currency

On Friday, the country becomes the South American nation to have removed the most zeros from its currency – 14 since 2008 With a loaf of bread costing 7 million bolivars amid rampant inflation, the central bank is hoping the move will simplify transactions

On Friday, the country becomes the South American nation to have removed the most zeros from its currency – 14 since 2008

With a loaf of bread costing 7 million bolivars amid rampant inflation, the central bank is hoping the move will simplify transactions