Venezuela’s currency and inflation troubles: New Sovereign Bolivar replaces Strong Bolivar

The currency name Bolivar is dedicated to hero of Latin American independence Simón Bolívar. I am sure he would not be one bit happy with the association given the repeated currency troubles in the country.

President Maduro has introduced a new currency named New Sovereign Bolivar to replace the old one named Strong Bolivar. This will knock off 5 zeroes from the older currency:

Caracas will begin issuing new banknotes after slashing five zeroes off the crippled bolivar.

The new sovereign bolivar, named as such to distinguish it from the current strong bolivar (which has proven to be anything but), will be anchored to Venezuela’s widely discredited cryptocurrency, the petro.

Each petro will be worth around $60 (£47), based on the price of a barrel of the country’s oil.

That will be 3,600 sovereign bolivars in the new currency, which signals a massive devaluation.

In addition, the minimum wage will be fixed at half a petro (1,800 sovereign bolivars) from Monday.

This is about $28 (£22), more than 34 times the previous level of less than a dollar at the prevailing black market rate.

Some more discussion here.

 

 

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