The Venezuelan economy has almost completely dollarized in recent months. Most transactions are made in US currency, while inflation was over 250% between January and May.
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The bolivar will get rid of a few zeros. Venezuela’s currency will lose six zeros on October 1 due to hyperinflation which has stripped it of its value, the country’s central bank said on Thursday (August 5th). “From October 1, the digital bolivar will enter into force when a new monetary scale is applied which removes six zeros from the national currency”, explains the Central Bank.
The Venezuelan economy has almost completely dollarized in recent months. Most transactions are made in US currency, while inflation was over 250% between January and May. Hyper-inflation reached 400,000% in 2018, nearly 10,000% in 2019 and 3,000% in 2020. Once a rich oil country, Venezuela has seen its GDP fall by 80% since 2013 and 65% of households live in poverty.
In 13 years, the bolivar will have lost 14 zeros, a sign of the successive devaluations imposed on the government. Former President Hugo Chavez (1999-2013) deleted three zeros in 2008. His successor and current president, Nicolas Maduro, did the same in August 2018 by removing five zeros.
The country will print new banknotes to accompany the measure as these have almost disappeared from circulation in the country. Most exchanges that are not made in dollars are done digitally (card payments, wire transfers or bank transfers). This decision aims to “facilitate” the use of money, bringing it back to “a simpler monetary scale”, continues the Central Bank.