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As reported by Reuters, the Venezuelan government plans to undergo a monetary reconversion in order to combat rapid inflation, which is expected to reach one million percent this year.

Key quotes

“Annual inflation in June topped 46,000 percent, according to the opposition-run Congress. The IMF said this week it could hit seven digits this year, putting it on par with the crises of Zimbabwe in the 2000s and Germany in the 1920s.

“The monetary reconversion will start on Aug. 20,” (Venezuela’s president) Maduro said in a televised broadcast, showing new bills that are to be released next month.  He said the overhaul would tie the bolivar to the recently launched state-backed cryptocurrency called the petro, without offering details.  Cryptocurrency experts have said the petro suffers from a lack of credibility because of a lack of confidence in Maduro’s government and the mismanagement of the country’s existing national currency.

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

The country’s high inflation rate has made it nearly impossible to obtain cash.  Venezuela’s minimum wage is now about the equivalent of $1 a  month, which has left citizens across the country unable to eat properly or obtain basic medical care – fueling an exodus of Venezuelans seeking to escape the economic crisis.

The government had been prepared to cut three zeroes off the currency in June but postponed the measure at the request of banking industry leaders who said the financial system was not ready for the measure.”