Northwest Arkansas Democrat-Gazette
New currency vexes Venezuelans
Citizens turn to charts, calculators as cost of goods uncertain
CARACAS, Venezuela — Venezuelans confused over the new banknotes popping out of their ATMs on Tuesday resorted to using calculators and conversion charts to figure out the value of each bill as the country’s new currency — with five fewer zeros — started circulating.
“I still don’t understand it very well,” said homemaker Maritza Vargas, withdrawing a 5 bolivar bill from her Caracas bank. “The truth is that I’m still not clear.”
The new currency is part of President Nicolas Maduro’s plan to confront runaway inflation and a plummeting economy that has pushed tens of thousands of Venezuelans to flee abroad.
Maduro says he’ll also increase the minimum wage on Sept. 1 by more than 3,000 percent, boost corporate taxes, set gasoline prices at international levels and impose new price controls.
But many economists say they fear the measures will cause more misery in the once-wealthy OPEC nation.
Maduro’s minister of communications, Jorge Rodriguez, said at a news conference that the economic measures are being implemented to improve the lives of Venezuelans.
As the new money went into use, banks capped customers’ daily ATM withdrawals at 10 bolivars — equal to roughly 15 cents on the commonly used black market.
At that rate, it would take seven days to buy a 2-liter bottle of Coca-Cola.
Venezuelans could make far larger purchases with debit cards, a long-favored method when cash supplies are limited.
Venezuela’s largest bill was 100,000 bolivars — worth less than 3 cents — under the former currency. The new bills top out at 500 bolivars — currently worth about $7.50.
Inflation this year could top 1 million percent, according to economists at the International Monetary Fund.
One bank passed out conversion charts to help customers, while other people
arrived with hand-held calculators, unsure how much basic goods such as eggs and rice will cost in the new currency.
“We have to be on the lookout,” said Yulima Rivas at an ATM in Maracaibo. “If we make a mistake, it’s like being robbed.”
Opposition politicians had called for a work stoppage and protests on Tuesday across Venezuela, drawing on tension and nerves caused by the new economic plan.
Despite the call, the streets appeared calm even if businesses in Caracas appeared slow to reopen after a bank
holiday a day earlier to allow for the conversion.
Maduro’s socialist party called its own rally on Tuesday in a show of support for the embattled president, who was targeted in a failed drone attack earlier this month.
Rodriguez, the communications minister, criticized the attempt by opposition leaders to undercut the government’s plan.
“They promote destruction,” Rodriguez said of opposition leaders. “But the vast majority do not want the destruction of the country.”
Caracas resident Carlos Espana held up crisp bolivar notes he’d taken from the bank, but he worried that the government’s plans would spur faster inflation.
“More confusion. Higher costs,” he said, noting that he would have to stand in line at an ATM for two separate days to buy a single empanada.
The bolivar’s value will be linked to a cryptocurrency — believed to be the first time a government has tried such a thing. The petro is backed by crude oil, and the government sets its value at $60, or 3,600 bolivars. The petro will fluctuate and be used to set prices for goods. Still, the cryptocurrency doesn’t trade on any functioning market, Francisco Rodriguez, chief economist of Torino Capital, wrote in a note to clients Monday.
The opposition politicians and unions, in calling for a strike, said the devaluation would deepen suffering.
Much of Caracas was working on Tuesday, however, with traffic flowing and many bakeries and supermarkets opened after being shuttered for days. Still, residents were befuddled by the headspinning math of the devaluation, the new currency and the very idea of a bolivar tied to the vaporous petro.
“They’re going to pay us in cryptocurrency now — petros? It’s crazy. I have no idea how it will work. We’re barely using bolivars at this point,” said Jose Bastida, a 58-year-old maintenance worker waiting outside a bank in central Caracas.