Black-Market Bolivars Crash Past 1,000 Per Dollar in Venezuela

Venezuela’s bolivar fell past 1,000 per U.S. dollar in the black market as world’s fastest inflation erodes the value of the South American nation’s currency.

That means that the country’s largest denomination note of 100 bolivars is now worth less than 10 U.S. cents. The currency has declined 16.9 percent in the past month to 1,003 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.

The bolivar is collapsing because the government keeps printing more money and the slump in oil prices means Venezuela is running out of dollars. The amount of cash in circulation or held in bank accounts in Venezuela has doubled from a year earlier, spurring the threat of hyperinflation. The country may face a $38 billion shortfall in its dollar income this year, analysts at Credit Suisse Group AG wrote in a note to clients on Wednesday, meaning a default on government debt is a real possibility this year.

“It’s not going to improve,” said Siobhan Morden, head of Latin America fixed-income strategy at Nomura Holdings Inc. in New York. “This is just the beginning. The question is will this economic stress cause change.”

The currency has lost 81 percent of its value in the last 12 months, according to dolartoday.com. That’s more even than the Azerbaijani Manat, the worst-performing official currency in the world. Last year, Venezuela’s central bank sued to block the popular U.S.-based website from publishing what it says is a misleading black-market exchange rates for dollars, claiming the move is part of a conspiracy to manipulate the South American country’s currency.

President Nicolas Maduro said last month that the country’s currency system needed “re-engineering” without offering specifics.