Courtesy of Mish.
The Venezuelan bolivar lost 45% of its value against the US dollar so far this month, the biggest monthly decline ever.
Officially it takes 10 bolivars to buy a US dollar. On the black market it takes 2,753 bolivars to buy a US dollar.
The bolivar is all but worthless. This is the classic definition of hyperinflation.
Please consider Venezuela’s Currency Just Had the Biggest Monthly Collapse Ever.
Venezuela’s currency – the so-called “strong bolivar” – is weakening beyond levels that analysts had forecast just a few weeks ago as an expanding money supply chases a limited amount of U.S. dollars.
“The government has started injecting bolivars into the financial system in an accelerated manner again, and it’s set off repressed demand,” Asdrubal Oliveros, director of Caracas-based economic consultancy Ecoanalitica, said in a telephone interview. “There are too many bolivars in the street. People have the option of either buying goods or dollars, and they’re buying dollars.”
The currency has lost 45 percent of its value so far this month to trade at 2,753 bolivars per U.S. dollar on Thursday, according to dolartoday.com, a widely-watched website that tracks the exchange rate in Caracas. That’s the biggest monthly decline ever, according to data compiled by Bloomberg.
“Venezuela’s entire economic environment is influencing this phenomenon,” Oliveros said, adding the exchange rate could end the year between 3,500 and 4,000 bolivars per dollar on the black market. “Inflation is going to keep rising, there’s a risk of default, and the political situation is becoming more tense each day. People prefer to protect their money.”
Official Currency Rates vs Black Market
Venezuela has maintained strict currency controls since 2003 and currently has two legal exchange rates — known as the Dipro and Dicom rates — of 10 and 661 bolivars per dollar used for priority imports.
