Venezuela To Chop Off Six Zeros From Bolivar In 3rd Currency Redenomination In 13 Years
Prior attempts of the Venezuelan government to get a handle on several years of hyperinflation included the dramatic and unprecedented recent step of issuing 1 million bolívar bills. The high denomination bill issued in March of course did literally nothing to solve the underlying problems which started in earnest in 2016 under a collapsing system, but it only made ordinary Venezuelans’ lives harder.
For example a single 1 million bolívar note would not currently be enough to buy a single cup of coffee, as a million bolivars is worth just over $0.32 US. The vast majority of working class people still need cash for daily transactions, including for public transit or local grocery and goods stores.
And now the next iteration of an attempted “solution” to the ongoing crisis is a fresh currency redenomination, which will mark no less than the third one in 13 years.
This time it will simply involve chopping off a lot of zeros to make things practically easier for cash transactions, as Bloomberg reports, “Venezuela is preparing once again to eliminate zeros from the national currency, in order to simplify daily transactions that hardly fit on a calculator or that require swiping the card several times to complete a purchase.”
Starting in August the central bank will cut six zeros from the bolivar, thus a single dollar would cost 3.2 bolivars instead of the current whopping 3,219,000.
The central bank move to delete a bunch of zeros is beginning to appear a semi-regular intervention given that stemming back to 2008 a total of eight zeros have been progressively removed.
The former president of retailers’ group Consecomercio Felipe Capozzolo had this to say of the anticipated move: “Not only has it become difficult to make payments because the amounts are too high, but printing such numbers is becoming difficult for the label makers,” according to Caracas Chronicles.
How many bolivars needed to buy one dollar?…
Because of this, clerks and store operators have already been known to routinely take away three zeros away to make daily accounting easier:
“A redenomination leaves you with numbers that are more rational and easier to understand, but you also have to enable means of payment, as well as change, which affects the ease of trade on goods and services,” Capozzolo added.
According to a Bloomberg recap, “After the second-longest stretch of hyperinflation in the nation’s history, annual inflation is now at 2,339% a year, compared to more than 300,000% in 2019, according to the Bloomberg Café con Leche index.”
Over the years the country has printed higher and higher notes ad absurdum…
“On a monthly basis, the price increase slowed further, to about 20% in May, compared to April. The central bank no longer regularly publishes inflation data,” the report adds.
Fri, 07/02/2021 – 16:40