- Country's biggest bank note now worth only 12 U.S. Cents
- Money supply is expanding as inflation nears 200 percent
Venezuela’s bolivar passed the physiological barrier of 800 bolivars per dollar Tuesday in black market trading as Venezuelans rushed to protect savings amid rising inflation. That means that the country’s biggest currency note of 100 bolivars is now worth about 12 U.S. cents.
The currency has declined 14.7 percent in the past month to 816 bolivars per dollar, according to dolartoday.com, a website that tracks trading in street markets where Venezuelans go to skirt limits on foreign-exchange purchases. The government maintains official rates of 6.3, 13.5 and about 200 bolivars per dollar for authorized purchases of items deemed essential.
Venezuela’s inflation, estimated by some to be nearing 200 percent, is the fastest in the world as President Nicolas Maduro’s administration prints more currency to pay budget expenses as the falling price of oil reduces foreign currency income. The amount of bolivars in circulation passed 3 trillion for the first time on Sept. 19, up 97 percent in the past year, according to data compiled by Bloomberg.
“None of these rates make economic sense,” Henkel Garcia, director of Caracas-based Econometrica, said in a telephone interview. “Neither 6.3 or 600 or 800 are close to the equilibrium exchange rate in the economy. It’s a sign that everyone wants to buy dollars. The dollar is worth whatever people are willing to pay for it.”
The bolivar has lost 88 percent of its value on the black market in the past year, according to data compiled by dolartoday.com. The country is preparing to issue bank notes in higher denominations next year sometime after congressional elections are held Dec. 6, a senior government official said last month.