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Each purchase requires so many bills that instead of counting, it is weighed.
Each purchase requires so many bills that instead of counting, it is weighed.

Hyperinflation Hurting Venezuelans

Hyperinflation Hurting Venezuelans

At a delicatessen counter in eastern Caracas, Humberto Gonzalez removes slices of salty white cheese from his scale and replaces them with a stack of bolivar notes handed over by his customer. The currency is so devalued and each purchase requires so many bills that instead of counting, he weighs them.

“It’s sad,” Gonzalez says. “At this point, I think the cheese is worth more,” Bloomberg reported.

It’s also one of the clearest signs yet that hyperinflation could be taking hold in a country that refuses to publish consumer-price data on a regular basis. Cash-weighing isn’t seen everywhere but is increasing, echoing scenes from some of the past century’s most-chaotic hyperinflation episodes: Post-World War I Germany, Yugoslavia in the 1990s and Zimbabwe a decade ago.

“When they start weighing cash, it’s a sign of runaway inflation,” said Jesus Casique, financial director of Capital Market Finance, a consulting firm. “But Venezuelans don’t know just how bad it is because the government refuses to publish figures.”

Once one of the world’s strongest currencies, the bolivar has been reduced to a nuisance. Basic purchases require hundreds of bills. Shoppers shove piles of them into gym bags before venturing into crime-plagued streets and shopkeepers stash thousands in boxes and overflowing drawers. In the absence of official data, economists are left to guess what the inflation rate is. Estimates for this year range from 200% to 1,500%.

Until now, as the bolivar sank, the government declined to print bigger-denomination bills. The 100-bolivar note—the nation’s largest—is worth less than a dime.

A few weeks ago, however, the government quietly asked five currency companies to submit bids for bigger bills—500, 1,000, 5,000, 10,000 , and perhaps a 20,000-bolivar note, according to someone with direct knowledge of the order.

The request is for the bills to be ready in time for Christmas bonuses. Normally such an order takes four to six months and so far no tender has been awarded. To minimize time and cost, the government is considering swapping only the color, not the design, of existing bills, and adding zeros, the person said. The Central Bank said it had no comment.

 

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