Venezuelan Bolivar collapsed with between 86.6% and 99.6% after the central bank resumed currency auctions for the first time since last August as part of its efforts to alleviate the serious dollar shortage and attempt to tackle hyperinflation.
At the new official dollar exchange platform DICOM, the rate is 25,000 Bolivar per USD, while EUR is exchanged for 30,987.50 Bolivar. This represents a devaluation of 86.6% for five months against the Euro and 99.6% for the subsidized rate of 10 Bilivar per USD, canceled last week. On the black market, however, individuals and companies that do not have access to official markets pay around 225,000 Bilivar per USD.
The devaluation of the Venezuelan currency is another effort on the part of President Nicholas Maduro to overcome the severe economic crisis in the oil-rich country. The depreciation of the currency will enable businesses to buy goods from abroad at significantly lower prices.
The Venezuelan government imposed a rigorous currency control in 2003, limiting access to the US currency to protect its declining reserves. This, however, caused a chronic shortage of everything from sugar to cancer medicines, and prices literally shot up at incredible rates.
The International Monetary Fund predicts that inflation in Venezuela will reach 13,000% by the end of this year and the economy will shrink by 15%.
Maduro said yesterday that he intends to propose to the Organization of Petroleum Exporting Countries (OPEC) and parties outside the cartel to jointly create a mechanism for issuing crypto-currency.
In his words, the idea was taken enthusiastically by OPEC Secretary General Mohammed Barkindo.