Venezuela to slash six zeroes from currency
Venezuela will slash six zeroes off its inflation-battered
currency the bolivar to make it easier to use, the central bank said on
Thursday.
The change will take effect on October 1 with the issuance
of new currency notes, called the digital bolivar.
"All monetary amounts expressed in national currency
will be divided by one million," the central bank of President Nicolas
Maduro's beleaguered leftist government said.
It said the goal of the change is to "facilitate"
the use of the bolivar.
It is the third time in 13 years that Venezuela -- suffering
the worst economic crisis in its modern era -- has used such a measure.
In August 2018, the government lopped five zeros off its
bank notes, having taken off three in 2008.
In 2018, the government replaced the ironically named strong
bolivar with the sovereign bolivar.
The once-wealthy oil producer is enduring its fourth year of
hyperinflation and its eighth year of recession.
From January through to May prices rose 265 percent.
Inflation was almost 3,000 percent in 2020 and more than
9,500 percent the year before, according to central bank figures.
"It was an expected decision," economist Cesar
Aristimuno, director of Aristimuno Herrera & Associates, told AFP.
"By itself it was necessary ... the billing and
accounting processes for companies were already practically impossible."
People had even resorted to using a shorthand for prices,
saying "thousands" instead of "millions."
There is such a shortage of bolivars that long queues are a
regular sight outside banks.
Transactions made in the local currency are usually done by
card payment or bank transfer rather than in cash.
Inflation is so bad that the everyday economy now works
mainly in dollars, with many stores listing prices in the US currency.
Back in May the government tripled the minimum monthly wage
but the new amount was still not even enough to buy a kilogram of meat.
However, Aristimuno warned that while "convenient"
this measure will not transform Venezuela's battered economy.
"We cannot hope for economic miracles from this
decision, taking into account that ... it comes without any underlying economic
announcements" that could reduce inflation or boost GDP.
The Maduro government is under international sanctions
championed by the United States, which is pushing for his ouster and does not
recognize him as the country's legitimate president.
With the currency overhaul, the central bank will issue new
notes with face values of five, 10, 20, 50 and 100 bolivars and a one-bolivar
coin, Communications Minister Freddy Nanez said on Twitter.
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