Venezuelan Currency Depreciated 14.75 Percent Against Dollar in One Week

RIO DE JANEIRO, BRAZIL – The Venezuelan currency, the Bolivar, lost 14.75 percent of its value against the dollar in just a week, during which the U.S. currency soared to an average of 782,025.16 bolivars by the end of Friday, the Venezuelan Central Bank reported.

Early in the week, the U.S. currency was traded in the official market at 666,713.21 bolivars, a figure that confirmed the high inflation of the South American country when compared to this Friday’s rate.

In the parallel market, where most of the foreign currency purchase and sale operations are conducted in the country, the dollar was traded on Friday at 855,478.39 bolivars, a markedly higher rate than that reported by the Venezuelan issuer.

Last Wednesday, the price of the dollar in the parallel market for the first time passed the 700.000 bolivars threshold per unit of the American currency.

The bolivar has undergone two processes of monetary reconversion: in 2008, it lost three zeros and was renamed the bolivar fuerte (strong bolivar), while in mid-2018, it lost another five zeros and was renamed the bolivar soberano (sovereign bolivar).

Given this instability of the local currency, Venezuela is experiencing a de facto or “spontaneous” dollarization process, whereby the majority of the products offered for sale are estimated in dollars, and it is possible to pay in foreign currency or in Bolivars.

In these cases, businesses tend to look at the parallel market exchange rate rather than the official one.

This type of payment has become widespread even in the most popular areas, where the calculation of prices is made in dollars.

Those who want to pay in bolivars must do so with debit cards, as the largest denomination banknote is 50,000, worth less than 10 cents of a U.S. dollar.

Source: infobae