Venezuela to is­sue big­ger notes ‘very soon’ as in­fla­tion surges

Kuwait Times - - BUSINESS -

Pres­i­dent Ni­co­las Maduro said on Fri­day Venezuela would is­sue higher de­nom­i­na­tion bills “very soon” as soar­ing in­fla­tion and a crum­bling cur­rency leave the cri­sis­stricken coun­try’s largest note worth just 2 US cents on the black mar­ket.

Still, the long-awaited en­try of 500 and 5,000 bo­li­var notes will only bring a brief respite amid rapid money print­ing and a weak­en­ing cur­rency. To­day 5,000 bo­li­vars buy just over $1 on the black mar­ket, which ex­ists be­cause Venezuela in­tro­duced cur­rency con­trols in 2003 but does not of­fer enough dol­lars to meet de­mand. Venezuela is be­lieved to have the world’s high­est in­fla­tion, although no data has been pub­lished for 2016. Money sup­ply rose 12 per­cent in the last two weeks while the bo­li­var weak­ened 65 per­cent in the last month.

As a re­sult, Venezue­lans of­ten carry back­packs full of bills and cash ma­chines fre­quently run dry due to long queues. “Sev­eral mil­lion bills of 500 bo­li­vars and then sev­eral mil­lion bills of 5,000 bo­li­vars will en­ter cir­cu­la­tion very soon,” Maduro said in a tele­vised ad­dress, not­ing that the cen­tral bank would pro­vide de­tails to­day and to­mor­row.

Adding to the cur­rency chaos, Venezuela’s credit card read­ers, al­ready shaky, suf­fered chronic mal­func­tions on Fri­day. Un­able to process trans­ac­tions, stores had to ask clients to use cash, trans­fers, or pay later. Maduro blamed a “cy­ber­at­tack” and said he was send­ing the Se­bin in­tel­li­gence ser­vice to Credi­card, a pay­ment pro­ces­sor, to take “all le­gal ac­tions.”

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