VENEZUELA INFLATION JUMPS 741% Total Currency Collapse Inevitable
Venezuelan consumer prices rose 700 percent while the economy
contracted by 18.6 percent, according to preliminary central bank
figures seen by Reuters, the sharpest contraction in 13 years and the
worst inflation reading on record.
The extended slump in oil
prices has turned the OPEC nation's once-prosperous oil-boom economy
into a mirror of the latter day Soviet Union, with rampant product
shortages leading leaving to skip meals and wait hours in food lines.
Venezuela's opposition-led congress has started publishing the
country's inflation rate based on its own data collection, as the
government of President Nicolas Maduro remains silent about the
crisis-stricken nation's soaring consumer prices. Venezuela's economy
has been in free fall since the 2014 collapse of oil prices, which left
the socialist economic system unable to maintain an elaborate system of
subsidies and price controls that functioned during the oil boom years.
Consumers can sometimes obtain basic goods at low-cost prices by waiting
for hours in supermarket lines but increasingly have to buy such goods
from smugglers on informal markets for more than 10 times the officially
Scuffles broke out between police and opposition
lawmakers who were protesting outside Venezuela's Food Ministry to
underscore shortages in crisis-wracked country Venezuelan president
Nicolás Maduro has appealed to his Colombian counterpart, Juan Manuel
Santos, to help resuscitate dialogue in Venezuela and avoid
international sanctions such as the implementation of the Inter-American
Democratic Charter. The Central Bank of Venezuela (BCV) experienced a
32.78% fall in the country’s foreign reserves at the close of 2016. gold
lopped off three zeros when it replaced its old currency in January
2008. The arrival of new banknotes on December 18 shows the government
is committed to putting those zeros back on. The newest denomination,
500 bolívares, will soon be joined by 1,000, 2,000, 5,000, 10,000, and
20,000 bolívares notes. Higher denominations are supposed to help
Venezuelans deal with rising prices. But it isn’t new notes that
hard-working Venezuelans need; it’s a new money. Destroying a currency
in less than a decade is no small task. And, yet, that is exactly what
Venezuela has done. A 100 bolívares note—the largest denomination in
circulation before the new notes arrived last month—could be used to
purchase more than 50 liters of milk in 2008. Today, with black market
exchange rates at more than 1,500 bolívares/USD, it takes roughly 18 of
those notes to buy a single liter. The new 500 bolívares note will not
even buy a cup of coffee in Caracas. Indeed, the value of notes in
circulation is so low that shopkeepers weigh out piles of cash rather
than trying to count it.
Steve Hanke, an economist at The Johns
Hopkins University and director of the Troubled Currencies Project at
the Cato Institute, estimates Venezuela’s monthly inflation rate at 131%
in December. That makes it the 57th official case of hyperinflation.
Venezuelan opposition has accused President Nicolas Maduro of violating
the constitution by delivering his annual state of the nation address
before the Supreme Court.
Mr Maduro said he hoped to be able to address the opposition-controlled National Assembly next year.
Last week the assembly declared that he had in effect abandoned his post by mismanaging the economy.
Mr Maduro said he was fulfilling his daily duties.
the National Assembly's decision, the Supreme Court ruled that Mr
Maduro was allowed to deliver his annual report to the judges. Why
you need sackfuls of banknotes to shop in Venezuela What is behind
the crisis in Venezuela?
The country with the world's largest
crude reserves receives over 90 percent of its foreign income from oil,
whose price has fallen since mid-2014, worsening a recession in the OPEC
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Venezuelans are struggling amid shortages of basic food products,
spiraling inflation and a depreciating currency that has dragged down
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