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VENEZUELAN CURRENCY

9 posts in this topic

 

I wonder if this would be worth investing in?  Even if it takes 5 to 10 years to change 

 

 

Venezuela’s currency is so devalued it no longer fits in ordinary wallets

 
 
 
 
By Sofia Barbarani November 27 at 6:00 AM
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A manager places the bank notes received from customers during the day into a cardboard box in Caracas, Venezuela, last month. (Manaure Quintero/Bloomberg News)

CARACAS, Venezuela — It’s not so easy to find someone who still uses a wallet in Venezuela, where inflation is expected to reach 720 percent this year and the biggest bill — 100 bolivars — is worth about 5 U.S. cents on the black market.

The currency has dropped dramatically in value as Venezuela’s oil-based economy has cratered and the government has frantically printed more money. Prices, meanwhile, are soaring. So Venezuelans must handle huge volumes of cash — so much that the bills don’t always fit in a standard wallet — with many people packing wads of currency in handbags, money belts or backpacks.

The owner of a tiny kiosk selling newspapers, cigarettes and snacks in one of Caracas’s nicer neighborhoods said that each evening he quietly stuffs a plastic bag full of the day’s earnings, around 100,000 bolivars (about $52) in notes of 10, 20, 50 and 100 bolivars. This is a country with one of the highest crime rates in the world, and carrying that much cash is dangerous. He said he doesn’t feel safe, despite having his own scooter rather than using public transport.

“All of Caracas is unsafe,” said the 42-year-old kiosk owner, who declined to give his name. Three years ago, the volume of cash he carried home after a long day of work was smaller, he said, “and so were the risks.” He said that his clients usually count out their notes before stepping out onto the street, since they are too scared to be seen holding money in public.

His best-selling item is cigarettes, which have climbed in price from 250 bolivars to 2,000 bolivars, now worth just over $1 on the black market. The sale of one pack of cigarettes alone will add a fresh batch of 20 100-bolivar bills to his earnings.

Down the road, in a different kiosk, a 70-year-old man who identified himself as Augustinho added up his afternoon sales on a tattered sheet of paper. He takes much of his morning earnings home before starting his afternoon shift. “I was robbed at gunpoint once,” he said. “I take all of my 100 notes home in the afternoon.”

On a busy road nearby, a couple of taxi drivers waited idly for their next customers. The eldest, a 70-year-old man who spoke on condition of anonymity, said that customers will sometimes hand over a stack of 100 20-bolivar notes to pay for a 2,000-bolivar fare.

The shrinking value of the currency has meant that withdrawing the equivalent of $5 from the ATM produces a fistful of at least 100 bills. Some ATMs now need to be filled every three hours, since the machines can hold only so much cash. Because of the difficulties in restocking the machines, there are often a limited number of functioning ATMs and endless lines of people waiting to withdraw money.

The hassles over cash have prompted many Venezuelans to pay their tabs with credit cards. The owner of a local cafe, who declined to give his name, said that 90 percent of his business’s earnings were paid electronically.

Electronic payment is increasingly common in the country, said Henkel Garcia, director of the Venezuelan economic think tank Econométrica. “The use of online payments is likely to have soared.”

But it is expensive for small businesses to buy and set up credit-card machines.

President Nicolás Maduro, who came to power in 2013 and has continued the socialist policies of his predecessor, Hugo Chávez, blames the country’s woes on an “economic war” waged by his opponents in the business community and in the United States. But, in a sign his government recognizes the problems with cash, authorities are planning to issue larger-denomination bills in January, according to local press reports.

The notes are reportedly set to start at 500 bolivars and reach 20,000 bolivars, or just over $10.

“They’re necessary for the economy, for the banks and for the people,” said Jose Grasso Vecchio, an economic consultant and former executive technical director of the Venezuelan Bank Association. “The move is a positive one.”

 

 

https://www.washingtonpost.com/news/worldviews/wp/2016/11/27/venezuelas-currency-is-so-devalued-it-no-longer-fits-in-ordinary-wallets/

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Anyone here invested--or thinking of investing--in this currency?

 

If so--let's discuss......

 

Why do you think it's a good investment?

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Not until that socialist dictator is kicked out of office before I would even touch their money.

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Anyone think this might be a good investment though it may take longer than Iraq to recover? 

 

The Meltdown in Venezuela's Currency Is Deepening

 The black-market rate for the bolivar plunges beyond 8,700 per dollar for first time
By 
Srinivasan Sivabalan
 July 21, 2017 at 3:49:20 PM EDT
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The meltdown in Venezuela’s currency is deepening as a crippling dollar shortage and a threat of oil sanctions take their toll on the economy. The black-market rate for the bolivar traded weaker than 8,700 per dollar for the first time, according to dolartoday.com on Friday, compared with the official rate of around 10 and a more widely used alternative rate of 2,757. That’s creating an illusion for foreigners observing the country’s stock market, which appears to be valued at $2.57 trillion -- bigger than Germany’s, France’s, India’s or Canada’s -- but is worth only $3 billion based on the black-market rate.

 

 

 

 

 

 

https://www.bloomberg.com/news/articles/2017-07-21/the-meltdown-in-venezuela-s-currency-is-deepening

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04 August 2017 - 03H20

Venezuela's currency crumbles at dizzying speed

 
0fec0c8010f5c85358190bb26e4825f6f0377438 © AFP/File / by Alexander MARTINEZ | In one year, Venezuela's currency, the bolivar, has lost 94 percent of its value

 

CARACAS (AFP) - 

Venezuela's money, the bolivar, is sinking faster and faster under an intensifying political and economic crisis that has left citizens destitute and increasingly desperate.

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Its depreciation accelerated this week, after a disputed vote electing an all-powerful "Constituent Assembly" filled with allies of President Nicolas Maduro, which the opposition and dozens of countries have called illegitimate.

On Thursday alone, the bolivar slumped nearly 15 percent on the black market, to be worth 17,000 to one US dollar.

In a year, the currency has lost 94 percent.

The decline has been dizzying -- yet largely ignored by the government, which uses an official rate fixed weekly that is currently 2,870 to the dollar.

Ordinary Venezuelans, however, refer only to the black market rate they have access to, which they call the "dolar *****," or "black dollar."

"Every time the black dollar goes up, you're poorer," resignedly said Juan Zabala, an executive in a reinsurance business in Caracas.

- Salaries decimated -

His salary is 800,000 bolivares per month. On Thursday, that was worth $47 at the parallel rate. A year ago, it was $200.

The inexorable dive of the money was one of the most-discussed signs of the "uncertainty" created by the appointment of the Constituent Assembly, which starts work Friday.

As a result, those Venezuelans who are able to are hoarding dollars.

"People are protecting the little they have left," an economics expert, Asdrubal Oliveros of the Ecoanalitica firm, told AFP.

But Zabala -- who is considered comparatively well-off -- and other Venezuelans struggling with their evaporating money said they now spent all they earned on food. A kilo (two pounds) of rice, for instance, cost 17,000 bolivares.

The crisis biting into Venezuela since 2014 came from a slide in the global prices for oil -- exports of which account for 96 percent of its revenues.

The government has sought to monopolize dollars in the country through strict currency controls that have been in place for the past 14 years. Access to them have become restricted for the private sector, with the consequence that food, medicines and basic items -- all imported -- have become scarce.

According to the International Monetary Fund, inflation in Venezuela is expected to soar above 700 percent this year.

In June, Maduro tried to clamp down on the black market trade in dollars through auctions of greenbacks at the weekly fixed rate, known as Dicom. There is also another official rate, of 10 bolivars per dollar, reserved for food and medicine imports.

"Things are going up in price faster than salaries," noted Zabala, who spends 10 percent of his income on diabetes treatment, when he can.

- 'No limit' -

Maduro has vowed that a new constitution the Constituent Assembly is tasked with writing will wean Venezuela off its oil dependency and restart industry, which is operating at only 30 percent of capacity.

But the president, who links the "black dollar" with an "economic war" allegedly waged by the opposition in collaboration with the US, has not given details on what would be implemented.

On Thursday, Maduro promised "speculators" setting their prices in line with "the terrorist criminal dollar in Miami" would go to jail.

For the past four months, Maduro has been the target of protests which have been forcefully confronted by security units, resulting in a toll of more than 125 deaths. 

The opposition says the new Constituent Assembly is an effort to create a "dictatorship" along the lines of Communist Cuba.

Against that backdrop of tensions, "there is no limit on how far the black dollar can go," according to Ecoanalitica. 

But a director of the firm, Henkel Garcia said he believed the current black market rate "didn't make sense" and he noted that in the past currency declines weren't linear.

Oliveros said increased printing of bolivares by the government was partly the reason for the black dollar's rise.

"When you inject bolivares into the market, that means that companies, individuals go looking for dollars, which are scarce," he said, estimating that the shortfall of dollars this year was some $11 billion.

The horizon is darkened further with big debt repayments Venezuela has to make, for instance $3.4 billion the state oil company PDVSA has to reimburse in October. That debt is denominated in dollars.

by Alexander MARTINEZ
 
 
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Venezuelan Currency Madness Valued Local Bank More Than Apple

By 
Christine Jenkins
August 11, 2017 at 7:00:00 AM EDT
  • Stock market worth more than Germany’s at official dollar rate
  • Rally reflects massive currency drop in black market rate
 
 
 
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Venezuela Inches Closer to Dictatorship
 
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Venezuela Inches Closer to Dictatorship

What does it take to surpass Apple Inc. as the world’s most valuable traded company? One way is to be listed in Venezuela, with its massively overvalued currency.

Venezuelan stocks are ascending the ranks of the most valuable companies on Earth, with lender Mercantil Servicios Financieros CA briefly topping Apple’s market capitalization last week, and now back in the No.2 spot. Five other top-20 companies are also Venezuelan, a mirage caused by currency controls combined with the world’s fastest inflation.

Most of the lender’s theoretical $775 billion market capitalization evaporates if you stop using the official exchange rate of 10 bolivars to the dollar. The value would be 0.1 percent of that at the black-market rate that most Venezuelans have to use if they want hard currency.

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“It’s madness,” said Asdrubal Oliveros, the director of Caracas-based economic consultancy Ecoanalitica. “That’s Venezuela’s problem, there’s a strong distortion of prices where there’s no single exchange rate.”

At the stronger rate, the stock market appears to be valued at $3.7 trillion, more than Germany’s, and on its current trajectory will be worth more than the U.S. market in less than a year. Meanwhile, back in the real world, the Venezuelan economy is set to continue its deep slump.

 

 

 

 

 

 

 

 

 

 

 

 

 

https://www.bloomberg.com/news/articles/2017-08-11/venezuelan-currency-madness-valued-local-bank-more-than-apple

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