Maduro move to lop five zeroes off currency worries Venezuelans

By Deisy Buitrago and Mayela Armas CARACAS/MARACAIBO, Venezuela (Reuters) - Some Venezuelans worried on Thursday about how to pay for public transport and gasoline after leftist President Nicolas Maduro announced plans to slash five zeroes off the country's bolivar currency, rather than the three originally planned. The more aggressive so-called currency redomination comes in response to Venezuela's hyperinflation, which the International Monetary Fund has said will soar to 1 million percent this year, destroying salaries and throwing the OPEC nation's already battered economy into a deeper tailspin.

Reuters July 27, 2018 00:07:46 IST
Maduro move to lop five zeroes off currency worries Venezuelans

Maduro move to lop five zeroes off currency worries Venezuelans

By Deisy Buitrago and Mayela Armas

CARACAS/MARACAIBO, Venezuela (Reuters) - Some Venezuelans worried on Thursday about how to pay for public transport and gasoline after leftist President Nicolas Maduro announced plans to slash five zeroes off the country's bolivar currency, rather than the three originally planned.

The more aggressive so-called currency redomination comes in response to Venezuela's hyperinflation, which the International Monetary Fund has said will soar to 1 million percent this year, destroying salaries and throwing the OPEC nation's already battered economy into a deeper tailspin.

Maduro's announcement late Wednesday night spawned confusion as to whether there would be legal tender small enough to pay for public transit or gasoline - which is so subsidized that filling up a car at a gas station costs less than the equivalent of $0.01 at the black market exchange rate.

"How will I pay for transport? They charge me 60,000 bolivars. With five zeroes fewer, that would be in cents," said Griselda Osorio, 55, as she shopped at a market in the western city of Maracaibo near Colombia.

"I am going to have to forget about transport and just walk. How will I put (prepaid credit) on my phone? Where do I find cents for that? This will just make things worse," said Osorio, a nurse whose current salary of 4 million bolivars - about $1.30 - will turn into 40 bolivars.

It also remains unclear whether banks can adjust their systems and cash machines by the announced deadline of Aug. 20, as well as when all the new bills will arrive in Venezuela.

Maduro's plan to lop five zeroes off the currency highlights the reversal of fortune in a once wealthy country, which has seen the bolivar lose over 99 percent of its value in the last year alone amid an economic meltdown.

The measure, according to economists, fails to attack the root of Venezuela's crisis - namely two decades of distorted state-led economic policy and excess expansion of the money supply.

"Eliminating the zeroes, although necessary, is insufficient because hyperinflation's underlying problem, which is a deep imbalance of the economy, is not attacked," said economist Asdrubal Oliveros of local consultancy Ecoanalitica.

The government has said it is the victim of an "economic war" led by opposition leaders with backing from Washington, which last year levied several rounds of sanctions against Maduro's administration and a group of top officials.

Many Venezuelans say that is a smokescreen designed to hide incompetence and bad policy decisions.

"We are more screwed by the day," said motorbike deliveryman Luis Ramirez, 60, as he delivered a package in Caracas. "This measure, which I do not understand very well, does not change anything."

(Writing by Alexandra Ulmer; Editing by Tom Brown)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.