Venezuela withdraws from circulation its largest and widest used banknote amid galloping inflation. The President Nicolas Maduro said yesterday that the banknote of 100 Bolivar will be withdrawn from circulation until Wednesday. At present, its value is only 0.02 USD on the black market, but is the most widely used note in the South American country.
The government has promised to release Thursday six new new banknotes and three new coins worth from 500 to 20,000 Bolivar. Maduro said that banknote 100 Bolivar is removed from circulation in the fight against smuggling along the border with Colombia.
The decision was immediately subjected to criticism, as many people and experts claim that 72 hours are not enough to move to the new banknotes. Venezuelans are already waiting in lines for hours to withdraw money from banks or ATMs.
Bolivar reported the most dramatic decline in its history, depreciating against the dollar by 60% since the beginning of November. This led to a crisis in the medical sector and hunger among millions of people. Paying in a restaurant or supermarket without a debit or credit card can often require a bag full of cash. A number of companies have asked customers to pay only by bank transfer.
The President of Venezuela Nicolas Maduro claimed that against his government is led economic war by the opposition and the US. The strict exchange controls introduced in 2003, in which the rate of Bolivar was tied to the dollar, coupled with high dependency on oil are the roots of the crisis, according to many economists. Venezuela is a member of OPEC.
Venezuelan Central Bank does not publish data on inflation this year. The economic consulting company Ecoanalytic predicted that annual inflation this year will be over 500%.