Got change for $5K? Venezuela’s bills get bigger

After years of soaring prices reduced the value of the largest 100-bolivar bill to just a few U.S. cents, Venezuelan authorities are finally preparing to issue larger-denomination bank notes, much to the relief of shoppers.

The notes — 500 and 5,000 bolivars — will be released toward the middle of December, said a senior government official who isn’t authorized to talk about the plans publicly. Additional bills of 1,000, 2,000, 10,000 and 20,000 bolivars will also enter circulation, the official said.

The refusal of the authorities to issue bigger bills had forced Venezuelans to ditch wallets in favor of bags of cash. Things have got so bad that some shopkeepers weigh wads of bank notes instead of counting them to save time. Inflation will probably end the year at 368 percent, according to the median estimate of 14 analysts who responded to a Bloomberg survey. Venezuela’s money supply has risen 130 percent over the past year, according to the Central Bank in Caracas data. On the black market, where a dollar costs more than six times as much as the weakest legal rate of 662 bolivars per dollar, the currency has slumped 65 percent in November.

International reserves hovering near a 14-year low of around $10.9 billion probably won’t fall much further, the official said.

The weakening of the currency, rising inflation and declines in real purchasing power will not likely stop until the government sees more dollars flowing into the economy, the official said. While crude exports account for about 95 percent of the country’s foreign currency earnings, the government eventually wants to bring that rate down to 40 percent by developing mining, tourism, and agricultural exports, according to the official.

MANAURE QUINTERO/BLOOMBERG A bakery manager weighs bank notes in Caracas, Venezuela, where people must carry large numbers of bills to shop.