"A currency without value": the bolivar in Venezuela is in free fall
This is the last symptom of the extreme economic, political and humanitarian crisis. The high price or shortage of food, commodities and medicine has plagued Venezuelans for years, but they worsened in 2016. According to the International Monetary Fund, inflation in Venezuela is expected to be 1.660%. The country has been in recession for three years.
On November 1, a dollar was equivalent to 1,567 bolívares, and a month later, a dollar is worth 3,480 bolívares, according to the popular DolarToday. com page, which monitors the unofficial rate.
It's a sinking currency,"says Russ Dallen, managing partner of Caracas Capital Markets, a Miami-based investment firm. "Nobody wants to have anything worth 50% less in a month."
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There are some factors that are contributing to this downturn.
The Government has been forced to inject cash into its system because paper money in circulation is not enough to pay for services.
Paula, 48, tears when she remembers how life in Venezuela has changed in recent years. While taking this picture she was cooking chicken legs for lunch, a meal she used to give the dog.
Portraying the face of hunger in Venezuela
A few weeks ago, the Government increased the amount of currency in circulation by 100% in one month. But since then, the rate has accelerated: in mid-November, the number of bolivars in circulation increased by 130% compared to 2015, according to the Venezuelan Central Bank.
This is what lies behind the free fall of the bolívar
In recent weeks the price of food has gone sky-high after the government stopped regulating the prices of some products due to shortages. Many traders stopped selling food because they were losing money due to government price regulation. Without this rule, Venezuelans are now finding products on the shelves, but prices are so high that only part of the population can buy them.
President Nicolas Maduro recently raised the minimum wage by 40%.
Venezuela reopened its border with Colombia, allowing Venezuelans to travel to the neighboring country, exchange currency and buy basic commodities and medicines. This also increased the demand for dollars, which diminished the circulation of bolivars.
Finally, the government reduced cash requirements at banks in Venezuela, which helped to increase the number of cash in circulation.
The Venezuelan government needs money because oil prices are still low. The country has delays in the payment of some debts, which could lead to a suspension of payments in mid-December. Oil is Venezuela's only major source of income.
In this context, there is no light at the end of the tunnel for the Latin American country.