Update on Venezuela demonetisation – Central Bank to exchange only ‘rational’ amount of cash…

Venezuela just demonetised its currency.  Unlike India, here demonetisation was just waiting to happen given the spiralling inflation. People  anways needed loads of cash to buy even basic essentials. So, they had to issue higher denomiation notes which they kept delaying. So finally first they said higher notes shall be issued and then a few days later knocked off the highest existing currency of 100 Bolivar.

This has made chaos even worse as people struggle to exchange their 100 notes into other denominations.

And now to add further to the woes, Venezuelan central bank says it will not exchange people bringing truckload of cash:

Venezuelan central bank chief Nelson Merentes said exorbitant quantities of 100-bolivar notes would not be accepted for deposit as part of an eventual exchange into higher-denominated bills as Venezuelans throng financial institutions to protect their cash savings.

Venezuelans are racing the clock after President Nicolas Maduro’s surprise announcement Sunday that the country’s largest bill — worth just a few U.S. cents on the black market — would be pulled from circulation within 72 hours as part of a new emergency economic decree to fight “currency attacks.”

Banks were jammed throughout Caracas Tuesday, with long lines of customers lugging bundles of bills in backpacks and grocery bags that they hoped to deposit by Thursday’s deadline. As the first official day of the exchange wound down, the central bank president cautioned that financial institutions would only receive “rational” amount of bank notes.

“We won’t accept people arriving with trucks and carts to deposit 100-bolivar bills,” Merentes said at a news conference late Tuesday.

Rational? Really? It does not make sense to talk about rationality after years of irrational policies at the first place…

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