The Bolivar, devalued but necessary in Venezuela

It is one of the most devalued currencies on the planet, but the bolívar in cash is still essential in the de facto dollarized Venezuela, since it solves retail operations in the face of the shortage of foreign currency, mainly dollars, of low denomination.

In the shops and vendors of Quinta Crespo, a popular area in the center of Caracas, the bolívar still subsists in payments for food such as meat, corn flour, eggs, coffee, cream, tomatoes, bananas, peaches and strawberries, according to various merchants and vendors.

The manager of a business, who preferred not to be identified, said that consumers pay in local currency for everything that costs less than US$5, especially with the recycled bills of 500,000 and one million bolívares, equivalent, de facto, to 0.5 and a bolívar respectively, after the monetary reconversion last October, which amputated six zeros from the currency.

“People buy (with bolivars) the minimum things, they pay for whey (milk cream) that costs 3.50 bolivars, the cheapest, or some 100-gram bags of coffee that cost 2.5 bolivars”, said Yenifer Pérez, a salesperson in another Quinta Crespo store.

circulating money

On March 8, 2021, the Central Bank of Venezuela (BCV) issued three bills to expand the monetary cone then in force, which were 200,000 bolívares, 500,000 bolívares and one million bolívares.

With the exception of the 200,000, today, a year later, they are the ones that circulate the most on the street, even more than the new bills issued five months ago as part of the reconversion, the third in this century.

According to BCV data, even after the reconversion was implemented, new pieces of the old denominations of 500,000 and one million bolívares continued to be put into circulation.

Between October and November, 52 million pieces of the 500,000 bill and 56.2 million pieces of the one million entered circulation.

On the other hand, in the statistics of the Central Bank there are no reports of having issued pieces of the new denominations of 20, 50 and 100 bolivars presented for the recent reconversion, which would explain the lack of these bills, which merchants and consumers say they have not seen. after five months of supposedly having entered circulation.

And the oldest bills, from previous monetary cones, were reduced to craft material, stationery, canvas and for making costumes.

Services

Juan Carlos, an appliance repairman, explained that, although the dollar is the one that dominates the market, it is necessary to have bolívares in cash for minor payments, such as transportation tickets or gas.

“Although the dollar is the one that is measuring up here in Venezuela, unfortunately, you do need to have cash for certain services, such as the ticket (for transportation) and domestic gas, which where I live do not accept dollars.”, said the man, while waiting in a queue to get on a bus.

The 10 kilo bottle (ball) is sold for four and a half bolivars, and they do not accept foreign currency.

The ticket for the long route that he was going to take, from the central zone of Chacaíto to the middle-class sector of La Trinidad, costs two bolívares, a little less than half a dollar.

In the few service stations that still sell subsidized gasoline, which costs 0.11 bolívares a liter, they also pay with cash bolívares, unlike the gas stations that Maduro calls “international”, where the fuel costs US$ 0.50 and the currency that reigns is the United States.

Venezuela continues to make significant progress in a process of digitalization of its economy, but not because it follows the international trend of eradicating cash, but mainly because of the loss of value of the bolivar, which when making large purchases is more than anything else, to make a bulk in the wallet.