Venezuelan bolivar has become worthless as inflation spikes

By:
on May 31, 2023
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  • The Venezuelan bolivar has become a worthless currency.
  • It has plunged from 505,720 in May last year to 2.65 million.
  • Chevron slashed its oil output forecast for Venezuela recently.

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The Venezuelan currency has plunged as the economic crisis in the country worsens. According to XE, 1 US dollar is equivalent to 2.65 million Venezuelan bolivars. The currency was trading at 505,720 in the same period in 2022, meaning it is now considered worthless.

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Venezuela sanctions

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The main cause for the ongoing Venezuelan bolivar crash is the sanctions imposed by the United States and its allies. These countries have imposed tight sanctions because of concerns on democracy and human rights. 

As a result, Venezuela has been unable to fully take advantage of its vast oil reserves. Sanctions make it illegal for other countries to buy the country’s oil. They also make it difficult for companies in the country to access Western technologies. 

Earlier this year, Chevron announced that it was boosting its oil production from the country. However, the company dealt the country a blow after it slashed its oil output for the year. The company hopes to produce about 170k barrels of oil per day, down from 200k barrels. It cited the general disrepair of the country’s infrastructure.

In all, Venezuela states that it was producing 800k barrels per day and it aims to get to 1 million barrels by the end of the year.

Venezuela inflation rate

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A plunging local currency has led to a surge of inflation in the country. Official statistics show that the country’s inflation surged to over 463% in April, up from 155% in October last year. Therefore, there is a likelihood that the country’s inflation will continue to worsen in the coming months.

Venezuela Boliver can only recover if sanctions imposed in the country are eased. For one, attempts by the recent administrations to end Maduro’s regime have failed. This is a signal that he will be the leader for the foreseeable future.

A strong Venezuela is a good thing for the United States and the world. For one, it would unlock millions of barrels of oil per day. At a time when inflation is sticky, more oil production would go a long way to help the situation.

For the US, it would help it by reducing the number of Venezuelan migrants coming to the southern border. Recent numbers show that the number of Venezuelans crossing the border has surged recently.The Venezuelan bolivar is not the only currency that is imploding. As I wrote here, currencies like the Nigerian naira, Argentina peso, and Zimbabwe dollar have all plunged.

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