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Venezuela: the bolivar devalued by 96%, according to the new official rate

Venezuela: the bolivar devalued by 96%, according to the new official rate
AFP / File
/ Federico PARRA

After the launch of new notes amputated by five zeros, the Venezuelan government has unveiled the second phase of its economic stimulus package that devalues ​​96% of its currency against the dollar, choices criticized by economists.

BCV said Tuesday that the new rate was 68.65 sovereign bolivars for one euro, equivalent to about 60 sovereign bolivars per dollar.

The previous official rate was equivalent to some 2.48 sovereign bolivars per dollar. Expressed in strong bolivars, the currency in effect until Monday, that would amount to changing it from 248,210 to 6,000,000 strong bolivars for a greenback.

According to socialist president Nicolas Maduro, the sovereign bolivar is indexed to the value of petro, the Venezuelan cryptocurrency with which the government intends to circumvent the lack of liquidity and financial sanctions of the United States.

This is the first time that a country leans its currency on a cryptocurrency. Prices and wages will be fixed in both currencies.

And each petro, according to the head of state, is equivalent to about $ 60, based on the price of a barrel of Venezuelan oil, or 3,600 sovereign bolivars.

In the streets of Caracas, long spins were visible to distributors and Venezuelans began trading with their new currency in the middle of a call for a general strike of 24H Tuesday launched by the opposition to protest against the decisions of the government.

But it seemed partially followed, only a few shops remaining closed.

"The banks are working and distributing cash (…) I have been able to make transfers, payments and everything is normal," said AFP César Aguirre, a 38-year-old accountant after have withdrawn money.

"Everything has increased"

But fears of rising prices were present. "Everything continues to be expensive (…) Everything has increased.I just bought an empanada (meat slipper) in Petare and it cost me two million” old bolivars (two sovereign bolivars), complained Carmen Maldonado, housewife.

In parallel, in the center of Caracas, hundreds of Chavistas marched to the presidential palace of Miraflores in support of the head of state, who was expected at the arrival of the procession. This will be his first appearance since the supposed attack in early August.

Moreover, as of Monday, is repealed the law which provided fines and penalties up to 15 years of prison for the authors of foreign exchange transactions carried out in margin of the very rigid control exerted by the State since 2003.

Venezuelans can now go to "authorized" exchange offices, of which 300 must open, authorities said.

The first foreign exchange transactions were expected in the afternoon, the government said.

Analysts and economists do not consider viable or "surrealist"” the government's program, which also provides for a rise in the minimum wage of nearly 3,400% in this country where inflation is expected to 1,000,000% by the end of 2018, according to the International Monetary Fund (IMF).

Millions of people have fled Venezuela because of the economic crisis.

One of the leaders of the opposition who called for the strike, Andrés Velasquez, estimated that the general strike was "60% followed", especially in the provinces.

"This is a first step (…) .This effort that begins today will know its climax during a call for an unlimited general strike," he said, acknowledging that the result Tuesday was disappointing.

21/08/2018 19:31:38 –
Caracas (AFP) –
© 2018 AFP


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