The Venezuelan bolivar loses 21% of its value in one month. Last Minute WORLD headlines and events



The fall of the Venezuelan bolivar currency, which lost 73 percent last year, continues this year. The official dollar exchange rate, which started 2023 at 17.5 bolivars, ended January at 22.3 bolivars, or a depreciation of 21.54 percent.

The Venezuelan bolivar currency, which lost 73% of its value against the dollar last year, continues to depreciate. The dollar exchange rate, which at the beginning of January was 17.5 bolivars, reached 22.3 bolivars on January 31.

Venezuelans, who pay for goods and services in dollars despite their income in bolivars, have suffered the most from the exchange rate appreciation.

In a country whose economy is based on oil and where almost all daily necessities, especially essential goods such as food, clothing and electronics, are imported in foreign currency, prices are also indexed to the dollar.

This situation is more affecting minimum wage workers and retirees whose wages have fallen below $6 as a result of the exchange rate appreciation, as well as government employees whose monthly income is between $10 and $50.

“The main reasons are money printing and loss of trust”

According to Henkel Garcia, director of Albus Data, an economic and financial advisory service, the main reasons for the sharp devaluation of the bolivar are the government’s payment of government spending by printing money for the benefit of the Central Bank of Venezuela (BCV) and Venezuelans. loss of confidence in the bolivar.

Henkel Garcia

Noting that the constant depreciation of the bolivar in Venezuela during the hyperinflationary process led to the de facto dollarization of the economy, Garcia said that although the South American country was the country with the highest growth last year, the exchange rate instability fueled the understanding that Venezuelans have gained in the hyperinflationary process: ” I must buy foreign currency before my money turns into stamps.”

In an interview with the Turkish Voice of America, the expert noted that government payments to civil servants in August and December last year by printing unrequited money to the Central Bank of Venezuela (BCV) caused a sharp appreciation of the dollar.

Garcia said that an increase in the exchange rate directly means higher inflation in a country where prices are indexed to the dollar. If the upward trend in these three variables continues, a repeat of the hyperinflation process may be inevitable. Exchange rate volatility is very similar to what we have experienced in hyperinflation in recent years,” he said.

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