It’s the latest sign of Venezuela’s extreme economic, political and humanitarian crisis. Sky high food prices — or massive shortages of basic food and medicine — have plagued Venezuelans for years and have gotten worse this year. Inflation in Venezuela is expected to rise 1,660% next year, according to the IMF. The country has been in recession for three years now.
One dollar fetched 1,567 bolivars on November 1. On November 28, a dollar was worth 3,480 bolivars on the widely-used unofficial exchange rate monitored by Dolartoday.com.
“It’s a currency that’s going down the toilet,” says Russ Dallen, managing partner at Caracas Capital Markets, an investing firm in Miami. “No one wants to hold on to something that’s going to be worth 50% less in a month.”
A few factors are behind the bolivar’s most recent plunge. The government has been forced to pump cash into its system because the money in circulation isn’t enough to pay for goods that cost a lot more.
Over the summer, the government was increasing the number of bolivars by 100% a month. But since then, the rate has accelerated: by mid-November, the amount of bolivars in circulation had increased by 130% compared to a year ago, according to central bank statistics.