Maduro currency reform fails to impress citizens| MENAFN.COM

Friday, 02 December 2022 08:02 GMT

Maduro currency reform fails to impress citizens


(MENAFN- Gulf Times) Venezuelans yesterday said they lacked confidence in President Nicolas Maduro's decision to knock three digits off the country's ailing bolivar currency amid soaring hyperinflation.
The measure to divide the bolivar by 1,000 will take effect from June 4, the leader announced on Thursday.
Maduro, 55, presented the move as a positive development intended to protect Venezuela against currency speculators and a US-led 'economic war against the Opec member.
'Venezuela has been victim of a brutal, economic war, said Maduro, whose government has been targeted by the US, European Union and Canada for sanctions over allegations of abusing democracy and rights.
New notes will be issued although there will be no change in the bolivar's value, he said.
Critics said the move would have no impact on the crisis-wrecked economy and just covers up soaring prices and a collapsing currency.
Millions in Venezuela earn just a dollar or two a month at black market rates and suffer food and medicine shortages.
Prices rose more than 2,600% in the last year, according to the National Assembly.
There is a severe cash crisis. 'An authoritarian government does anything it wants. This is not going to stop inflation, said Jose Vasquez, 46, selling coffee at the exit of a subway station in the eastern part of Caracas.
The bolivar has fallen 99.99% against the US dollar on the black market since Maduro came to power in April 2013.
A $100 purchase of bolivars then would now be worth just a single US cent.
If inflation continues as it has over the last year, another redenomination will be required in 20 months.
Critics said the currency measure was no panacea for Venezuela's economic mess and just a psychological ploy to make Venezuelans forget the extent of the hyperinflation.
'It's a cosmetic measure, which does not impact the bottom line, said local economist Asdrubal Oliveros.
'After a few months you will have to continue issuing new bills or decide to remove more zeros (from) the currency, added Oliveros.
Maduro faces re-election in May, though is likely to win against an opposition that has largely boycotted the vote.
However, one leader, Henri Falcon, has broken ranks to run against Maduro.
Falcon is promising to dollarise Venezuela's economy as a way to beat hyperinflation and regain investor confidence.
'Amid the biggest economic collapse in the history of Latin America, the government of Nicolas Maduro attempts to hide hyperinflation by knocking zeros off the currency, said Francisco Rodriguez, a Venezuelan economist and Wall Street analyst working as Falcon's chief economic adviser.
Central bank president Ramon Lobo told state television that the measure seeks to 'attack inflation and reduce the shortage of cash.


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