Venezuela: in the face of hyperinflation, the currency reduced by six zeros

Faced with rampant hyperinflation, Venezuela resolves to a new drastic reform.

Venezuelans must now subtract six zeros from their national currency, the bolivar. For several years, the country has been mired in a terrible economic crisis. Before the reform, a baguette cost seven million bolivars.

This new conversion should not upset the life of the country, which has the highest inflation in the world. On the other hand, it intends to facilitate everyday transactions.

“I think the only thing that’s going to get better is that I shouldn’t be carrying so many tickets anymore. Because to have the equivalent of five dollars in bolivars, in cash, you need a suitcase“, testifies a bus driver.

Since 2008, thirteen zeros deleted

A new 1 bolivar coin and especially new 5 to 100 bolivar banknotes are starting to circulate. 100 bolivars are equivalent to 24 dollars. This is the third conversion the country has known in thirteen years. Since 2008, no less than fourteen zeros have been deleted.

“This conversion is very similar to the other two except that the macroeconomic environment is much worse. Venezuela is emerging from seven years of recession. 2021 will likely be the eighth year of economic contraction“, explains José Manuel Puente, economic analyst.

With its oil resources, Venezuela was once one of the most prosperous countries in South America. Today, more than 90% of the population lives below the poverty line according to a recent university study. Faced with hyperinflation, Venezuelans resort to the dollar more than their currency. More than two-thirds of transactions in the country are carried out with the US greenback.