Venezuelans have started the week in confusion and panic with the introduction of the “sovereign bolívar,” a new currency dictator Nicolás Maduro insists will improve the devastated socialist economy. Speaking to local media, Venezuelans say the government never explained the value of the new currency, meaning they have no idea how to use the new bills.
“Lots of confusion on top of everything, they haven’t given us full information,” a man identifying himself as Andrés Alcalá, holding a stack of “sovereign bolívars” fresh out of a bank ATM, told the outlet NTN24. “I wouldn’t even know what the change would be [if I bought something] … that sort of thing, what the coins cost”:
Maduro announced the creation of the “sovereign bolívar” on Sunday as a parallel currency to the bolívar, the nation’s longtime currency, and the “petro,” a cryptocurrency Maduro launched in December as an alternative to the bolívar for countries who wanted to do business with Venezuela but feared the consequences of engaging a collapsed economy. The “sovereign bolívar” slashed five zeroes off the end of the bolívar’s value while triggering a change in the exchange rate with dollars from 285,000 per dollar to 6 million per U.S. dollar.”
The new bills and coins went into circulation on Tuesday. According to the Caracas government, 3,600 “sovereign bolívars” are worth one “petro.” According to Venezuelan government rates, a petro is worth $60, though the U.S. government has generally forbidden Americans from dealing in this currency. The result is that most Venezuelans do not seem to know the value of the “sovereign bolívar,” or how that affects the bolívars they already have.
Venezuelan outlet Caraota Digital posted a video of a reporter asking Venezuelans basic questions about their new currency, such as, “What is the exchange rate for 100,000 sovereign bolívars?”
“I don’t know,” “I have no idea,” and what appeared to be random and incorrect guesses made up the majority of answers.
In addition to the new currency, Maduro announced he would increase the legal minimum wage by 3,500 percent, essentially guaranteeing that most small businesses would be forced to close. Many did close over the weekend, baffled by how they were supposed to label prices in their stores given that Maduro did not explain what the actual value of the “sovereign bolívar” is. While businesses have 90 days to comply with the new minimum wage, many remained closed on Tuesday, still unsure how to label their prices. Many Venezuelans also abstained from attempting to purchase anything on Tuesday (Monday was a national holiday to celebrate the new currency) because they did not know how to use their new money.
Economists around the world have decried the new economic plan as lunacy.
“This is crazy,” economist Henkel García told the Agence France-Presse on Monday.
“What Maduro presented constitutes a conjunction of unrelated measures, with no clarity whatsoever in its reach, which thus creates stress and uncertainty in the economic dynamic of the next few weeks,” another economic expert, Asdrúbal Oliveros, told the Venezuelan outlet Runrunes. He predicted further “paralysis” in commerce as people continued to receive no explanation of what the new currency means for the value of their savings.
Venezuela’s anti-socialist opposition has responded to the move by demanding citizens participate in a “freeze-out” of business around the country. On Tuesday, many in the capital appeared to be partaking: businesses were shut down, public transportation was not running, and the streets, according to local media, appeared “desolate.” El Nacional, the largest opposition newspaper in the country, reported that, similarly, empty streets were photographed throughout the country, from far-west Táchira state to the capital. The opposition claims 60 percent of the country has participated in the commercial walkout so far, though proving how many are deliberately protesting versus choosing to shut down their businesses or stay home until further clarification occurs is difficult.
In a notable contrast, in Los Teques, Miranda state, Venezuelans took to the streets to protest the entire economic overhaul, calling it yet another attempt to save a failed system.