Venezuela’s New Currency Does Little So Far To Stabilize Economy

Nicolas Maduro

by Hanna Bogorowski   Venezuela introduced a new currency on Aug. 20 as a hopeful solution to the country’s rapidly devaluing currency and skyrocketing inflation rates, but after just a few weeks, Venezuela is already seeing 100 percent inflation. The Venezuelan government issued the new currency, called the “sovereign” bolivar, to replace the “strong” bolivar, NPR reported on the day of the rollout. The new bolivar is worth about 100,000 of the old bolivars, and is pegged to the government’s cryptocurrency, the petro. The Bloomberg Cafe Con Leche Index revealed Thursday that the price of a cup of coffee has risen to 50 bolivars. For comparison, 50 of the new bolivars is 5 million of the old ones, after President Nicolas Maduro removed five zeros on July 25 in an effort to stabilize the economy and simplify transactions. The annual inflation rate is now hitting over 100,000 percent. Venezuela is currently suffering through a five-year crisis that is leaving it with a collapsed economy, hyperinflation and a complete breakdown of public goods and services, including deteriorating roads, food shortages, disturbing water cleanliness, failed electricity, high crime and a lack of adequate medicine for the sick. The conditions in Venezuela are causing mass migration flows out of the…

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In An Effort to Stem Out-of-Control Hyperinflation, Venezuela Cuts ‘Five Zeros’

Nicolas Maduro

Reuters   Venezuela on Monday slashed five zeros from prices as part of a broad economic plan that President Nicolas Maduro says will tame hyperinflation but critics call another raft of failed socialist policies that will push the chaotic country deeper into crisis. Streets were quiet and shops were closed due to a national holiday that Maduro decreed for the first day of the new pricing plan for the stricken economy, which the International Monetary Fund has estimated will have 1 million percent inflation by year end. The price change comes with a 3,000 percent minimum wage hike, tax increases meant to shore up state coffers and a plan to peg salaries, prices and the country’s exchange rate to the petro, an elusive state-backed cryptocurrency. Economists say the plan, which was announced last Friday, is likely to escalate the crisis facing the once-prosperous nation that is now suffering from Soviet-style product shortages and a mass exodus of citizens fleeing for other South American countries. Venezuelans were skeptical the plan will turn the economy around. “I can’t find a cash machine because all the banks are closed today,” said Jose Moreno, 71, a retired engineer in the central city of Valencia,…

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