Guest views are now limited to 12 pages. If you get an "Error" message, just sign in! If you need to create an account, click here.

Jump to content
  • CRYPTO REWARDS!

    Full endorsement on this opportunity - but it's limited, so get in while you can!

Venezuela cancels 5 zeros from its currency


climber7
 Share

Recommended Posts

 

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
306241784_0-10.jpg&w=1484
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/

Link to comment
Share on other sites

  • 7 months later...
  • 3 weeks later...

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
1000x-1.png
 

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

  • Upvote 1
Link to comment
Share on other sites

  • 2 weeks later...
 
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.

ADVERTISING

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
 
 
Link to comment
Share on other sites

 

 

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
 
 
 
Play Video
Play
 
Mute
Current Time0:03
/
Duration Time3:24
Loaded: 0%
 
Progress: 0%
 
Fullscreen
Venezuela Inches Closer to Dictatorship
 
Why China and India Are in a Heated Stand-Off
How War in Korea Would Affect Asia
 
 

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.

800x-1.png

“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

Link to comment
Share on other sites

  • 7 months later...

“Taking out three zeros doesn’t in any way solve any of the causes of hyperinflation,” said Jean Paul Leidenz, senior economist at Caracas-based Ecoanalitica. “It’s just a cosmetic fix that won’t work.”

 

CARACAS, Venezuela — Economic pledges may be par for the course in election campaigns, but in hyperinflationary Venezuela, the candidates' dueling promises are going further, with the incumbent vowing to lop a few zeros off the currency, while his main challenger calls for the adoption of the U.S. dollar.

CRVD4C3YOA5DJEEAA4AF6GSYBA.jpg
President Nicolás Maduro speaks in Caracas on Thursday. (Venezuelan presidency/AFP/Getty Images)

President Nicolás Maduro late Thursday briefly outlined his monetary rescue plan. In a country where a dozen eggs can cost 250,000 bolivars ($5) amid worsening inflation, he would chop three zeros off the currency — arguably bringing the price for those eggs down to 250.

“I ask you all for your prayers and support for the success of the monetary reconversion,” Maduro said in a televised event Thursday night.

The move came as Henri Falcon — a former governor running against Maduro in elections set for May — is proposing a far more radical fix. He wants to follow the path of countries such as Ecuador and Panama by dollarizing the Venezuelan economy. Doing so, he says, would prevent the printing of new bills — instantly constraining inflation.

Socialist Venezuela is going through a crisis that has left people struggling to pay for food and find medicines. Prices are being influenced by a black-market exchange rate that rises by the day and is currently five times the nearly inaccessible official rate.

Customers are standing in hours-long lines at banks to take out a daily limit, set so low that it barely covers the price of a cup of coffee. Larger transactions are done by bank card or transfer — although some vendors are charging double for electronic payments.

Maduro’s redenomination plan was met with serious skepticism by critics and analysts, who say that the impact on hyperinflation would be minimal — and that the plan would be confusing. By June 2, under Maduro’s plan, new bolivars with lower denominations would be circulated — but old ones, with denominations as high as 100,000, would remain valid. It would leave vendors charging two prices — one for old bills, the other for the redenominated bolivar.

Salaries too would be redenominated — so little would change in terms of buying power.

I26PO2MYQYYLXOT6CGBRARKFUQ.jpg
A shopper looks at the almost empty shelves in a supermarket in Caracas. (Carlos Garcia Rawlins/Reuters)

Economists say simply chopping zeros off the bolivar notes is unlikely to halt hyperinflation, since the government would still be printing reams of cash. In addition, the forces that have sent prices soaring, including food and medical scarcities, would remain in place. In fact, some Venezuelan business owners have already started eliminating three zeros from prices, simply because they're too long to fit in printed receipts.

“Taking out three zeros doesn’t in any way solve any of the causes of hyperinflation,” said Jean Paul Leidenz, senior economist at Caracas-based Ecoanalitica. “It’s just a cosmetic fix that won’t work.”

Maduro’s announcement is just his latest attempt to control runaway inflation: He has already launched a new cryptocurrency, the petro. An executive order by President Trump, however, has banned U.S. transactions in the petro, which U.S. officials have dubbed “a scam.” Few see the petro as a genuine solution — and Maduro’s new redenomination plan appears to be a tactical admission that the government is seeking another answer.

TWP2SB73WM36DJN7LR4XRMQVOU.jpg
Henri Falcon, presidential candidate for the Progressive Advance Party, speaks at a news conference Tuesday in Caracas. (Manaure Quintero/Bloomberg News)

One thing is certain: The debate on how to halt hyperinflation is at the center of a presidential election that opposition leaders have called a farce and have boycotted. But Falcon — a former ally of leftist firebrand Hugo Chávez, who, before dying of cancer in 2013, handpicked Maduro — insists he has a chance.

The Yankee dollar, Falcon says, will help him win.

Falcon’s dollarization plan has appeared to hit a nerve with the country’s impoverished people.

In Latin America, Ecuador, Panama and El Salvador use the U.S. dollar — constraining budgetary spending and the setting of interest rates while providing monetary stability. Under Falcon’s plan, everything from salaries to taxes to food would be priced in dollars, and for a certain period, low-income earners would receive a $25 monthly subsidy through a so-called “solidarity card.”

“The prices of everything are calculated at the rate of the dollar here. The only thing that isn’t dollarized is salaries,” Falcon said in an interview with The Washington Post. “We want people to recover their purchasing power. We need them to.”

Falcon’s dollarization plan, analysts say, may present Venezuela with a bigger fix than Maduro’s redenomination.

“One is a superficial, makeup-like change, and the other is an actual restructuring aimed at stopping inflation,” Leidenz said.

That’s not to say dollarization doesn’t carry risks. It would bind the hands of the government on monetary policy, and would leave Venezuela’s economy under the influence of a currency whose value it cannot control.

“Dollarizing is like cutting out an important arm you need, an important tool, in exchange for stopping hyperinflation as fast as possible,” Leidenz said. “It’s a debate I wish was happening among academics, not through electoral propaganda.”

Faiola reported from Miami.

 

 

 

 

 

 

https://www.washingtonpost.com/news/worldviews/wp/2018/03/23/venezuela-hopes-to-tackle-the-worlds-worst-inflation-by-deleting-zeros-from-its-currency/?utm_term=.9c9b99eed4b2

Link to comment
Share on other sites

  • 1 month later...
9 minutes ago, climber7 said:

Sorry, my computer got hacked BAD today 

Can only post link from my phone 

 

https://themindunleashed.com/2018/05/venezuelas-currency-plunges-to-one-seventh-the-value-of-world-of-warcraft-gold.html

 

Thanks for resurrecting this thread climber7, Somehow missed it until today. I think I will at least entertain the idea of buying a few. You just never know.

 

   pp

  • Upvote 1
Link to comment
Share on other sites

  • 3 months later...
  • yota691 changed the title to Venezuela cancels 5 zeros from its currency
 
9517.jpg

  

 Arab and international


Economy News Baghdad

Venezuela has launched a new currency linked to its virtual currency "Petro" as part of a series of reforms announced by President Nicolas Maduro, where the new currency will enter the markets as of Monday.

The new currency, dubbed the sovereign Bolivar, will be linked to the "petro" virtual currency, and the price of the "petro" will be about $ 60 based on the price of a barrel of Venezuelan oil equivalent to the new currency of 3,600 Bolivar sovereigns, indicating a significant devaluation.

Maduro recently announced that the country needed to implement a "fiscal discipline" system and to stop printing money too much in recent years.

Maduro's new economic reforms include raising the minimum wage to half a petro (1800 Bolivar sovereign).

This amount is about $ 28, which means a 34-fold increase from the previous minimum wage, which was equivalent to less than $ 1 per black market price.

In parallel, the three main opposition parties called on Saturday for a general strike on Tuesday to protest against the reforms.


Views 18   Date Added 08/20/2018

 
Link to comment
Share on other sites

Venezuela Cancels 5 Zeros From Its Currency

 
 Last updated 20/08/2018  62
f26202155-750x430.jpg

Follow-up / awareness

Venezuela has launched a new currency linked to its virtual currency "Petro" as part of a series of reforms announced by President Nicolas Maduro, where the new currency will enter the markets as of Monday.

The new currency, dubbed the sovereign Bolivar, will be linked to the "petro" virtual currency, and the price of the "petro" will be about $ 60 based on the price of a barrel of Venezuelan oil equivalent to the new currency of 3,600 Bolivar sovereigns, indicating a significant devaluation.

Maduro recently announced that the country needed to implement a "fiscal discipline" system and to stop printing money too much in recent years.

Maduro's new economic reforms include raising the minimum wage to half a petro (1800 Bolivar sovereign).

This amount is about $ 28, which means a 34-fold increase from the previous minimum wage, which was equivalent to less than $ 1 per black market price.

Link to comment
Share on other sites

How can Venezuela overcome hyperinflation?

  

9570.jpg

 Arab and international

 

Economy News Baghdad:

The situation of inflation in Venezuela is going from bad to worse, prompting the state to prepare to delete 5 zeros from the local currency this month, in a stumbling attempt to restore purchasing power .

 

In the 12 months ending June, inflation in Venezuela was 46.3 percent .

An analysis published by Bloomberg Opneon on the question of the possibility of stopping hyperinflation in Venezuela, saying that the solution is available, but President "Nicolas Madura" is likely to resort to .

 

The solution in the US dollar may be to do so since Madura may replace the Venezuelan Bolivar with the green paper. This may be achieved by converting all their non-value local currencies which will be disposed of and replaced by dollars of the remaining government stock at the daily informal exchange rate .

 

That could end the hoarding of foreign currency and restore incentives for savings and investment .

 

There are earlier models of using this solution, including Ecuador, which resorted to the use of the dollar in 2000 and contributed to the rapid suppression of inflation, which is accelerating significantly when it was jumping 50% or more per month .

 

Under normal circumstances, prices rise as a result of governments continuing to print money. In the absence of this, no one can increase prices because there is no new money to pay for goods .

 

A professor at Johns Hopkins University, Steve Hankey, an expert on the conditions of countries seeking to stabilize their currencies, such as Argentina, Russia, Zimbabwe and Argentina, and a proponent of the "dollarization" theory, said Venezuela should now go to do so .

 

There are thousands of things to do, but the only thing that needs to be done immediately is building stability. "Whoever does it will be a national hero ."

 

Francisco Rodriguez, the adviser to Maduro's rival Henry Falcon in last May's presidential election, agrees with the view that the immediate replacement of the dollar gives confidence in the battle against hyperinflation .

 

Still, one question arises: Why is Maduro unlikely to agree to this scenario? The main reason for this is to abandon a coin bearing the name of the Venezuelan editor and replace it with the currency of the United States, which is the "greatest enemy ."

 

Madura rejected the idea when his rival, Falcon, put it in the last election as an idea equal to the handover of sovereignty .

 

Venezuela could also end rampant inflation by resorting to other stable currencies such as the euro, but that still forces the state to abandon control of monetary policy and exchange rates .

 

For example, if Venezuelan oil prices fall sharply, the country will not be able to intervene by cutting interest rates or devaluing the currency .

 

The loss of flexibility is a problem for Ecuador and other countries that have adopted the dollar as a currency such as El Salvador and Panama, and for the different countries within the eurozone, which eventually reached a unified monetary policy through the ECB .

 

"The trend toward replacing the dollar with the bolivar will reduce the ability to grow economically because it will reduce competitiveness," said Asadropol Oliver, director of an investment firm in Caracas .

 

But putting an end to hyperinflation will not make it easier for Venezuela to pay for the import of food, medicine and other essentials. It will not ease the huge debt burden or even ease tension in the once prosperous country .

 

Economist Ricardo Houseman, a critic of Maduro and a minister of planning in Venezuela in the 1990s, called dollarization a "mirage" and believed priorities were to ease the state's grip on the economy and secure debt relief and foreign aid .

 

He added that the trend towards the dollar should be taken into account only if the state received aid, but "Hanki" believes that the lenders and donors will not intervene as long as inflation out of control .

 

But none of these strategies is possible as long as Maduro sticks to the presidency .

 

"You can not solve such crises with these culprits in power, " says Jeffrey Sach, an economist at Columbia University who helped Bolivia overcome hyperinflation in 1980 .

 

The dollar is already an informal pricing standard in Venezuela and is used illegally in many transactions. On August 2, the government abolished some currency controls, enabling companies and individuals to swap money through specific exchange companies and increase access to hard currency .

 

"This is too limited and too late," he said. "There is a crack in the way for Venezuela, and the rift can not be solved step by step."

Views 311   Date Added 08/22/2018

http://economy-news.net/content.php?id=13350

Link to comment
Share on other sites

"What A Disaster": Chaos Returns To Venezuela One Day After Massive Devaluation

Profile picture for user Tyler Durden
Thu, 08/23/2018 - 05:01

Just one day after Venezuela's historic currency devaluation, which lopped off 5 zeros from the currency and prices while bizarrely pegging the "sovereign Bolivar" - the country's latest currency incarnation - to the petro, an oil-backed cryptocurrency (which has been banned by the US Treasury), chaos has predictably returned to the country with the greatest petroleum deposits in the world.... and hyperinflation failed to depart for even one day.

That what Henrique Rosales discovered when he went to an ATM on Tuesday - the day after Venezuela's historic currency transformation took place - to withdraw Venezuela’s new currency: he found it dispensed a maximum of 10 sovereign bolivars a day, the equivalent of 15 U.S. cents.

"This money is going to disappear out of my hands in no time," said the 29-year-old waiter, who told the Wall Street Journal he hasn’t seen cash in five months. He hasn’t been able to pay for bus fare and walks several miles a day from his hilltop slum to the seafood eatery where he works.

"I’m realizing the government has no plan to get us out of this nightmare. What a disaster."

Rosales' reaction was predictable (we previewed the chaos that lay in store for the Latin American socialist paradise over the weekend😞 he is among the many Venezuelans swept by confusion and anger as the government of President Nicolás Maduro rolled out its latest economic overhaul as part of its struggle to keep up with the world's greatest hyperinflation, surpassing even that of the Weimar Republic.

Maduro called the measures “a really impressive magical formula” intended to stabilize the economy, including a new, highly devalued currency as well as tax and wage increases.

It wasn't magic: the country's new "sovereign bolivar" is identical to the old currency, which was named the strong bolivar, except the new bills miss five zeros. This was the government’s "answer" to a broken economic model that has seen prices double every few weeks.

Many shops remained closed, unable to obtain the working capital they need to transact; other shopkeepers said they had no idea how much to charge customers, while others, like construction worker Pablo Delgado, 44, doubted that a country suffering through dire food shortages and faltering public services would soon see a return to stability.

"For me," he said, “none of this is going to make any difference. Maduro says prices aren’t going to rise. But three days after his announcement, we have seen that they’re rising."

That's an understatement.

As we reported previously, on Friday night president (or as the White House calls him "dictator") Maduro - promising to contain inflation that has made a mockery of local workers' savings and labor - announced that he would introduce the new currency.  Banks, which opened after a long holiday weekend - Monday was "made" into a mandatory holiday to give institutions an extra 24 hours to figure out the chaos -  made the new bank notes available on Tuesday. And while ATMs appeared to have a daily withdrawal limit of 10 sovereign bolivars, bank tellers were willing to hand over 50, less than $1 a day.

Well before noon, most ATMs in east Caracas were out of cash according to the WSJ. Those standing in line to see a teller used their phone calculators to figure out how much money they could withdraw (they didn't like the answer).

Worst of all, the hyperinflation was not only back, but worse than before because within just a few hours of the new currency’s debut, its value had dropped nearly 10% to 65 sovereign bolivars per dollar, according to DolarToday.

bolivar%208.22.jpg

By Wednesday, the [latest] bolivar had lost another 9%, and was last trading at 71.21 -  a loss of 20% in 2 days.

But while nobody expected hyperinflation to go away just because 5 zeros had been chopped off, what set of the real chaos and sheer confusion was the government's decision to force an increase in the minimum wage to $30 a month from the less than $1 a month workers now make - a decision many battered businesses say would bankrupt them. The government said it would help small business make those payments by - drumroll - printing out even more bolivars, making the whole devaluation moot, while auctioning dollars three times a week to maintain a stable exchange rate.

But the worst news is that the socialist government's grip over the economy is about to get even tighter.  Maduro is expected to announce new price caps on 50 basic products, extending a system of controls that has crushed the private sector. Meanwhile, as the WSJ so well summarizes, Venezuela is in default of $6 billion in debt, can’t pay to keep up its once-vaunted oil sector and is unable to reliably provide services like water and transportation.

Meanwhile, most economist predict that Maduro’s program will only exacerbate inflation that the International Monetary Fund says will top 1,000,000% by year’s end; it's currently at just under 110,000%.

bbg%20cafe%20con%20leche.jpg

Adding insult to injury, whereas the world was fascinated with Zimbabwe's bout of hyperinflation not that long ago, Venezuela's monetary plight barely registers. And while Venezuela’s currency troubles are reminiscent of Zimbabwe’s plunge into hyperinflation a decade ago - when its government printed a 100 trillion Zimbabwean dollar bill - whereas the iconic Zimbabwe bill quickly turned into a collector’s item and a warning of what eventually happens to every fiat currency...

zimbabwe%20trillions.jpg

... Venezuela’s bolivars haven’t provoked nearly the same interest because the new bills are virtually indistinguishable from previous ones.

sovereign%20bolivar.jpg
“It’s hard to get excited about them, all of the notes are very similar in design,” said Owen W. Linzmayer, a San Francisco-based bank-note expert who catalogs world currencies. “Very soon, these bills are going to be worth nothing.”

Curiously, the WSJ notes that the new bolivar notes bear printing dates of January 2018, suggesting the Maduro administration had been planning the monetary conversion long before it was announced. What about the old, and now defunct bills? Not even the beggars want them.

In recent years, Venezuela’s government had spent hundreds of millions of dollars annually to import its old bolivars from large commercial printers like the U.K.’s De La Rue and Boston-based Crane Currency, supplier to the U.S. Federal Reserve. But now, many of those bills could be seen muddied and crumpled up on the street, so worthless that not even street beggars picked them up.

 

amazing photo from @business... people are literally trashing their #bolivar
as #Venezuela carried out a 95% devaluation of its currency over the weekend amid an historic economic crisis.

 
 


But Venezuela's biggest tragedy is not the hyperinflation or collapsing economy, nor the government corruption and the dictator in charge, it's that the people have simply given up. As the WSJ writes, an ineffective and disjointed opposition had called for a national strike on Tuesday, in response to the government’s economic measures.

But with so many businesses closing amid the economic malaise, it was hard to tell who was participating in the protest.

Some shopkeepers, like 63-year-old butcher Jesus Montes, said he just couldn’t take part: "I didn’t want to partake because my products would go bad and also because of my employees,” he said, noting that they needed to work and earn. “After my products are all gone, I don’t know what I’m going to do."

Fernando D’Abreu, owner of Peter Pan bakery, said he couldn’t afford to close his shop either. “I have to pay rent, light, the employees. At the end of the month, you have to pay taxes,” he said, wondering how long he and his eight workers could hold out.

Existential questions aside, Venezuela has more tangible problems: with hyperinflation still front and center, 33-year-old call-center supervisor Carolina Santeliz wondered how to use the few sovereign bolivars she withdrew.

“I don’t even know what to do, what I could buy. Maybe food, but it won’t go far,” said Ms. Santeliz, who earns $2 monthly and can’t help her mother pay for medication. “I’m afraid that one day I won’t be able to eat,” she said. “Sometimes I don’t even sleep as I think about how I could stretch my money.”

Others were convinced that things would just get worse.

“We are on a dead-end street,” said Vanessa Suárez, an accountant in Caracas. "Maduro’s measures are improvised. You buy what you can because you don’t know if there will be anything tomorrow."

And as long as Venezuela's starving and frightened people remain afraid, unwilling to rise up and overthrow their ruler, it is safe to say that tomorrow will indeed be worse than today.

https://www.zerohedge.com/news/2018-08-22/what-disaster-chaos-returns-venezuela-one-day-after-massive-devaluation

  • Like 1
Link to comment
Share on other sites

Last Thursday, the price of a toilet towel roll was two million and 600,000 Bolivar - Reuters
Last Thursday, the price of a toilet towel roll was two million and 600,000 Bolivar - Reuters

URGENT - 

Venezuela has devalued its currency by 96 percent under a new exchange rate announced by the central bank on Tuesday, August 21, 2018, after the new banknotes began trading in the first phase of a recovery plan launched by President Nicolas Maduro to tackle the crisis. Economic development. 

The central bank set the local currency exchange rate at 68.65 billion euros, equivalent to about 60 billion dollars to the dollar. 

The announcement was made the day after the introduction of new banknotes after the removal of five zeros of them, within the framework of Maduro plan, which was criticized by employers who said the results will be counterproductive.

gosht.jpg
One kilogram of meat worth 9 million and 500 thousand Bolivar - Photo: Reuters

 
Maduro said in a videotaped video posted on Facebook on Monday evening that he was pleased that the new currency, called the sovereign Bolivar, was operating "at 100 percent." "The banking system behaves like a hero," he said. 

The streets of the capital are almost deserted, as most shops and departments are closed and common transport facilities are off. 

On Tuesday morning, queues lined up with ATMs, which provide new banknotes, although the ceiling is 10 billion bolivars, not enough to buy a cup of coffee in the country, which suffers from high inflation. 

"Banks are working and giving cash," said accountant Cesar Aguirre, 38, who has been able to make remittances and payments and everything goes as usual. 

Socialist President Maduro confirms that the new notes will be the starting point for "a big change." The largest category of these notes is 500 Bolivarian sovereigns (50 million current Bolivars, equivalent to seven dollars on the black market, which is currently the de facto reference).

 

brnj.jpg
One kilogram of rice worth 2 million and 500 thousand Bolivar - Photo: Reuters

But analysts and economists say the government's economic reform program is unworkable and even "unrealistic". 

The program also aims to increase the minimum wage by 3400 percent (34 times), ease currency controls and introduce a new fuel price system. 

"These decisions will aggravate the economic turmoil," the president of the employers' union Videcamaras Carlos Larrazabal told a news conference. 

"We do not believe that the current government can restore the confidence necessary to make the reform plan credible," he said, adding that decisions could "destroy companies with problems in their assets."

panir.jpg

One kilogram of cheese worth 7 million and 500 thousand Bolivar - Photo Reuters

 

 

The director of Econometrica, Henkel Garcia, saw it as "illogical," while inflation is expected to reach 1 million by the end of 2018 in Venezuela. 

The economic situation in Venezuela, a country that was very rich and has the largest oil reserves in the world, has deteriorated dramatically. 

Oil supplies 96 percent of Venezuela's revenue but has fallen to its lowest level in 30 years. It reached 1.4 million barrels per day (bpd) in July, compared with a record production rate of 10.2 million barrels a year ago. 

The deficit is 20 percent of gross domestic product and foreign debt, 150 billion dollars, while the reserves are only nine billion. 

"If the deficit and the unregulated version of the currency (to counter inflation) remain, the crisis will worsen," economist Paul Liddens told AFP. 

- Regional crisis -

 Maduro confirmed in the video recording on Facebook that the business community is obliged to "abide" by the new procedures "otherwise we will hold them accountable." 

"These new measures will make Venezuelans' lives more difficult," Vice President Mike Pence wrote in a tweet on Twitter. He asked the Maduro government, which he accused of "tyranny", to allow humanitarian access. 

For its part, the United Nations said it estimates the number of Venezuelans who fled the country because of the crisis by 2.3 million people. 

The Secretary-General of the Organization of American States, Luis Almagro in a tweet on Twitter countries in the region to "keep their doors open to the people of Venezuela, who became the victim of the worst humanitarian crisis in the continent." 

It called on three of the main opposition parties to strike for 24 hours against "

The former trade union leader Andres Velasquez , who shared his party 's "radical issue (Cozza R) in the strike , " It 's a first step. "He added that the goal is to organize the " social protests "while demonstrations sporadic taking place in protest against food shortages. 

In response to the move parties, called the man The second in the presidential camp Diosdado Cabio supporters to organize a counter demonstration to express their support for the Head of State.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

  • Recently Browsing   0 members

    • No registered users viewing this page.


  • Testing the Rocker Badge!

  • Live Exchange Rate

×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.