Venezuela has devalued the bolivar, in an attempt to align the currency’s value with the country’s black market, AFP reported. Amid hyperinflation, many Venezuelans rely on the black market to gauge the currency’s value.
The Central Bank of Venezuela announced the devaluation on Monday and reported that the Interbanex private exchange platform would be allowed to exchange money in the country at a rate determined by supply and demand.
Interbanex has said that its exchange is rate 3,200 sovereign bolivars per US dollar.
A dollar exchange rate in the black market as of Monday 01.28 was 2,909 bolivars, compared to 2,084 bolivars on the last auction at Exchange Market System (Dicom), El Nacional reported citing the Central Bank of Venezuela.
This means that the minimum monthly salary of 18,000 bolivars translates into only $8.64. While Nicolas Maduro’s government has cracked down on the illegal money trade, many Venezuelans rely on this trade to buy and sell currency.
Inflation in Venezuela is set to hit 10 million percent in 2019, according to the International Monetary Fund.
The country’s economy has been in a steady decline since the sharp drop in oil prices in 2014 that hit the budgets of the world’s major oil producers. Apart from the oil price crash, Caracas has been under constant pressure from US sanctions aimed at President Nicolas Maduro and his government.
Because of the sanctions, Venezuela stopped using the dollar for its international transactions since October last year, switching to the euro. The government also pegged the bolivar to the oil-linked cryptocurrency Petro last summer.
The spiraling cost of everyday items has led to shortages of food and medicine, which in turn prompted almost three million Venezuelans to flee the country since 2015, according to UN figures.
In addition to Venezuela’s deepening financial woes, the country is currently in political turmoil after opposition leader Juan Guaido declared himself interim president last week. Guaido has been recognized as Venezuela’s legitimate leader by the US and most of Latin America. Maduro denounced Guaido’s move as a “vile” Washington-sponsored coup, and severed diplomatic relations with the US in response. Meanwhile, the US promised $20 million in humanitarian aid to the Guaido-led government, and the UK rejected Venezuela’s request to withdraw $1.2bn in gold stored in the UK.