Venezuela plans to devalue the currency by six zeros to curb inflation

Caracas – The Venezuelan government plans to devalue its currency by six zeros as a measure to counter a six-year recession and a 2,000% rise in inflation. According to the plan, the 100-bolivar note will be the highest valued currency note from October. Moreover, its actual value will be 100 million bolivars. It is also reported that the Venezuelan central bank will launch a digital currency.

Venezuela’s economy has been in a deep slump since 2018. According to various reports from the United Nations and other international organizations, the situation in Venezuela is anarchic, with an estimated 5 million people fleeing the country. Over the past four years, the United States has imposed stringent sanctions on Venezuela, which has affected the fuel, tourism and mineral sectors.

It has been revealed that the policies of Venezuelan dictator, Nicolas Maduro, have been responsible for this. Maduro’s policy has led to political instability in the country. There is a massive shortage of food and essential commodities. The situation is believed to have worsened due to the addition of the coronavirus pandemic. Inflation has risen dangerously in the last few years, reaching 2,300% this year. Just five litres of water costs 74 lakh bolivars. Billions of bolivars are required for one US dollar.

Against this backdrop, the Venezuelan government has once again launched desperate measures to restore the value of its currency. For the third time in the last 13 years, it has been decided to delete zeroes from the currency. Venezuela’s late dictator Hugo Chavez’s presidency was reduced three zeros from the currency in 2008. After that, Maduro reduced five zeros in 2018. Now the proposal to reduce six zeros will take effect from October, it is said.

Last year, the Venezuelan government tried to use cryptocurrencies to cope with a declining economy and rising inflation. However, the new plan shows that even this measure has not been successful. Following the failure of the cryptocurrency, Venezuela’s central bank has now indicated the launch of a digital currency. However, analysts claim that these efforts are unlikely to succeed.

Meanwhile, the Venezuelan government is said to be in the process of negotiating with the Biden administration in the United States. The move is believed to be aimed at hoping that the economy will improve if the United States eased sanctions.