A pile of bolivar notes sit at a PDVSA gas station on Aug. 18. Photographer: Carlos Becerra/Bloomberg
Bloomberg
by Eduardo Thomson and Fabiola Zerpa
8/19/2018
Excerpts:
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.
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.
………………………………………………….
Maduro’s new strategy for managing the economy is a desperate response after years of disastrous policies that undercut growth, sent prices soaring and turned what had once been one of Latin America’s wealthiest countries into a dysfunctional nation that’s spawned a refugee crisis. …………..
………………………………………
To make things more complicated, the new bolivar’s value will be linked to a crypto currency — believed to be the first time a government has ever employed the technique. The so-called Petro is backed by crude oil and is valued by the government at $60, or 3,600 sovereign bolivars. The Petro will fluctuate and be used to set prices for goods. — (bold emphasis added)
……………………………….
View the complete article including video, images and links at: