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Venezuela's 95% Devaluation Adds to Chaos After Drone Attack

  • Venezuela’s massive currency devaluation adds to chaos in the country
    One likely outcome is that inflation, which already was forecast to reach 1 million percent this yea Venezuela’s massive currency devaluation adds to chaos in the country
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America
Category:
Economy
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Venezuelan President Nicolas Maduro carried out one of the greatest currency devaluations in history over the weekend -- a 95 percent plunge that will test the capacity of an already beleaguered population to stomach even more pain.

 Venezuelan President Nicolas Maduro carried out one of the greatest currency devaluations in history over the weekend — a 95 percent plunge that will test the capacity of an already beleaguered population to stomach even more pain.

The official rate for the currency will go from about 285,000 per dollar to 6 million, a shock that officials tried to partly offset by raising the minimum wage 3,500 percent to the equivalent of just $30 a month. While Maduro boasted in Friday night’s announcement that the International Monetary Fund wasn’t involved in the policies, aspects of the moves bore a resemblance to a classic orthodox economic adjustment, albeit with some confusing twists.

One likely outcome is that inflation, which already was forecast to reach 1 million percent this year, will get fresh fuel from the measures. Prices are currently rising at an annualized rate of 108,000 percent, according to Bloomberg’s Café con Leche index. A massive exodus of Venezuelans fleeing the crisis to neighboring countries will likely increase and with it, tensions and restrictions like the ones seen over the past few days.

Bloomberg