Business & Economy

Venezuela’s bolivar given new makeover in bid to boost economy

Caracas, Oct 1 (EFE).- Venezuela’s government carried out its third currency adjustment of the 21st century on Friday, introducing a new bolivar with six fewer zeros in a bid to revive an economy battered by skyrocketing prices and monetary devaluation.

Known as the digital bolivar (even though physical bills also will circulate), it was worth around 5.14 per dollar on Friday afternoon on the black market, which most retailers in Venezuela use to set their prices.

The goal of leftist President Nicolas Maduro’s administration is to revive the use of the bolivar in Venezuela, where hyperinflation made bookkeeping records with the national currency unmanageable and led to the dollar’s being used for nearly 70 percent of all transactions.

Venezuela’s central bank said in a statement in early August that the planned currency adjustment was aimed at supporting and deepening the development of the country’s digital economy.

It said then the makeover was occurring at a time when the oil-rich South American nation is “embarking on a path of economic recovery after the crisis produced by the brutal attack on our economy, our national currency and the criminal imposition of an economic and financial blockade,” a clear reference to United States sanctions that were ramped up in 2019 under then-President Donald Trump in a bid to effect regime change.

The bank clarified in that statement that “the introduction of the digital bolivar does not affect the value of the currency.”

Most economists say the removal of the zeros may be necessary for practical purposes but that the economic impact of this new currency adjustment will be minimal and that other measures are needed to halt the rapid and constant rise in consumer prices, which climbed 10.6 percent in August.

They also cautioned that, as in the case of the introduction of the sovereign bolivar in August 2018, the new currency could also become virtually worthless due to hyperinflation.

Even though an entirely new family of bills was to have begun circulating on Friday, the only ones seen thus far have been the five and 10 digital bolivar bills, which are worth roughly $1 and $2, respectively.

Twenty, 50 and 100 digital bolivar bills and half-bolivar and quarter-bolivar coins are to be incorporated in the coming days, according to the Superintendency of Banking Sector Institutions of Venezuela (Sudeban).

The Commerce Ministry is currently verifying that the new currency is being used correctly at business establishments, since retailers and customers are having to adjust to a third bolivar make-over in 13 years.

All told, 14 zeros have been taken off the bolivar: three in 2008, five in 2018 and six this year.

The new digital bolivar got off to a rocky start on Friday morning, with the price of that new currency falling quickly in black-market trading.

The “Enparalelovzla” portal, which monitors seven black-market currency exchanges, verified that the digital bolivar depreciated by 4.17 percent against the dollar – to 5.25 per greenback – in the first few hours after its official launch.

It recovered some of that lost value, however, on Friday afternoon, when one dollar was priced at 5.14 digital bolivars. EFE


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