Business & Economy

Venezuela’s bolivar making comeback for small retail purchases

By Carlos Seijas Meneses

Caracas, Feb 16 (EFE).- Venezuela’s bolivar, which had been in free fall for four years and has lost 14 zeros in different adjustments since 2008, is now holding its value and has started to make a comeback for small purchases at retail outlets.

Unlike past overhauls that sent people scrambling to exchange their local money for greenbacks for fear of spiraling prices, the bolivar has stabilized since leftist President Nicolas Maduro’s administration carried out a new currency makeover on Oct. 1, the third this century.

The exchange rate has remained at between four and five bolivars per dollar and the inflation rate has been held in check.

Seven retailers in downtown Caracas all said that more shoppers have made their payments in bolivars since October.

“They’ve paid more in bolivars because the (bolivar to) dollar (exchange rate) has stabilized. People aren’t as afraid as before that the money in their accounts will depreciate,” Jose Alexander Castro, a salesman at a butcher’s shop in the downtown Quinta Crespo sector, told Efe.

The retailers Efe spoke with in that sector and other parts of downtown Caracas said around 60 percent of their transactions are now in bolivars, compared with well below 50 percent prior to the most recent currency adjustment.

“People want to hold on to their foreign currency since the price (of the bolivar relative to the dollar) isn’t going up or down. Right now, 60 percent of the payments are in bolivars, whereas before the reconversion they represented 20 percent,” said another shopkeeper who preferred not to be identified.

Economist Jose Guerra told Efe that “in working-class sectors payment in bolivars is quite widespread, even though the prices are in dollars.”

“For people in these popular markets, it’s very expensive to operate in dollars,” he said, also citing “the security issue” and the fact that most do not have dollar-denominated bank accounts.

Yarida, 50, makes all of her payments in bolivars. Every two weeks, her employer deposits the equivalent of $50 in her account and she uses that money to buy food.

A big reason for making payments in bolivars is a lack of small-denomination dollars in circulation, which forces shoppers to either spend the entire amount of their bill in a single shopping trip or forgo their purchase altogether.

At retail establishments in La Candelaria, another downtown area of Caracas that also has seen an uptick in bolivar transactions, the price of cheese and meats such as ham and bologna is shown in the local currency and sellers told Efe that they haven’t fluctuated in more than three weeks. EFE


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