Venezuela Adjusts The Currency with Six Zeros

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Samson:  Venezuela adjusts its currency with six zeros

24th October, 2021

Venezuelans have woken up to an adjustment in their currency, the bolivar, to remove six zeros from it, in a measure that would facilitate daily transactions in this country facing hyperinflation, the highest in the world, and this is the third time that the value of the bolivar has been adjusted within 13 years. Since 2008, fourteen zeros have been omitted. According to AFP.

"I had no difficulty shopping this morning. The new prices were displayed on top of the old ones. Plus the price in dollars," said Josefina Galindo, a cleaner who went shopping in the upscale Chacao de Caracas neighborhood on her way to work, noting that the price (in dollars) had not changed.

"I paid by credit card," she said. Some of the (card payment) platforms stopped working, but mine was working.” Before that, she had taken the bus from her popular Koç district to Chacao and paid… at the old price and in the ex-bolívar.

She said, "I was apprehensive when I saw the queue, but I paid a thousand bolivars (25 cents of dollars) as usual, noting that the collector was calling out 'alif as usual', but the collector pointed out that the price of the ticket will rise from 1 to 1.5 bolivars on Monday ( 25 to 37.5 dollar cents).

New cash denominations

The central bank will issue new banknotes of five, 10, 20, 50 and 100 bolivars and a coin of one bolivar, but they are not in circulation after Friday. 

A hundred bolivars is equivalent to 24 dollars, and some stores were not yet ready for this adjustment in the morning, as the parking garage in Chacao accepted payment only in dollars, but most bakeries and cafes made the adjustment, and a worker at a bakery in the city center said, "Everything is going well until right Now".

Before adjusting the value of the currency, the price of a loaf of bread was equivalent to seven million bolivars, in a country that was considered one of the richest countries in South America thanks to its oil. But also because of mismanagement and political crisis.

According to a recent university study, 94.5% of families live below the poverty line ($1.9 a day). According to the study, the population of Venezuela is now about 28.8 million, which means that about 5 million people have left the country due to the crisis. economic and political.

The new bolivar will be equivalent to 100,000 billion bolivars in 2007, reflecting the staggering decline of the Venezuelan currency.

 This, of course, led to a lack of purchasing power for wages. "We receive our salary every two weeks and it is equivalent to less than three dollars," said Marles Guerrero, a 43-year-old teacher who earns millions of bolivars. Eco Analytica studies about 1600% in 2021, more than two-thirds of transactions in the country are conducted in dollars, the currency of the United States, the archenemy of the regime. Individuals cost about $220, credit cards and bank transfers are used instead of cash exchanges, and daily payments in bolivars have become very confusing.

Kids game

 To give a tip to a worker who parks the car in the garage of a restaurant, the card must be paid, as the service provider receives a receipt instead of cash, and bus stops have been turned into exchange offices in the open, to face the lack of liquidity, in order to ride this means of transport in which payment is only accepted in bolivars, he said. William Hernandez, 56-year-old driver "We exchange a dollar for four million bolivars. The price of a ticket (the bus) is two million bolivars."

On the street, children play with bundles of real banknotes that have long been of little value, the government invoking international sanctions imposed since 2019, especially by Washington, which has been seeking to oust President Nicolas Maduro since he was re-elected for a second term in 2018 in elections The opposition rejected its findings.

Negotiations are underway between the Chavez government led by Socialist President Maduro and the opposition led by Juan Guaido, whom about fifty countries consider, including the United States, as interim president of the country, and Venezuela, the former oil giant, produced last February, according to the figures of the Organization of Petroleum Exporting Countries "OPEC", 520 thousand. barrels of oil per day, far less than the 3 million barrels it was producing per day in 2013, and while some Caracas residents fear the new currency adjustment will reduce purchasing power, others have welcomed the simplification of dealings, including accountant Rodrigo Bermúdez, commenting that “It is a relief...the number of digits makes any transaction very tiring,” he said, pointing to an invoice with too many zeros to comprehend.

Three quarters of Venezuelans live in extreme poverty

 A study published on Wednesday showed that three quarters of Venezuelans live in extreme poverty due to the unprecedented economic crisis in which their country is floundering after it was a rich producer of oil. She lives in extreme poverty, meaning that her income does not allow her to cover her food needs, and 94.5% of families live below the poverty line ($1.9 per day). According to AFP.

"We have reached the extreme poverty limit," said sociologist Luis Pedro Spain, during his presentation of the study, while extreme poverty continues to increase in the country. According to the study, in 2019-2020, the extreme poverty rate in the country reached 67.7%, while the poverty rate reached 91.5%. According to the study, the population of Venezuela is now about 28.8 million, which means that about 5 million people have left the country due to the economic and political crisis it is experiencing.

And Venezuela, which was considered one of the richest countries in South America thanks to its oil, has witnessed a decline in its GDP by 80% since 2013, mainly due to the decline in its oil production and the decline in black gold prices, but also due to mismanagement and political crisis.

The country is also witnessing hyperinflation with the collapse of the value of the local currency against the dollar, and the data of the study strongly contradicts the official figures submitted to Parliament, which say that 17% of people live below the poverty line and only 4% live in extreme poverty, and according to the study, only 50% of Venezuelans of working age are currently employed. Women are the most affected by unemployment, as the percentage of working women is only 33%.

The study confirms that in light of the gasoline shortage and the restrictions imposed to combat the Covid-19 pandemic, the “transportation crisis” is especially affecting the population looking for work. The sociologist warned that "the costs of workers going to work are starting to become higher than the wages they receive."

In Venezuela, the minimum wage, with food vouchers received by many employees, barely exceeds $2 a month, a pittance that does not cover transportation costs, even though the average wage in the private sector is around $50 a month.

According to the study, only 65% ​​of 11 million young people of school age (3 to 24 years old) are enrolled in educational centers in the country, a decrease of 5%, and 17% of those aged 16 to 24 are enrolled in university. The study was conducted between February February and April 2021 on a sample of 17,402 households residing in 22 out of the country's 24 states.  LINK