The Venezuelan authorities, in the midst of a serious economic and political crisis, devalued the bolivar by 95% and tied it to the raw cryptocurrency Petro. As a result, the local currency, now called the “sovereign Bolivar,” depreciated almost 24 times.
After the monetary reform, the country moved in a two-currency system: the bolivar exchange rate is tied to the national petro tokens, and those in turn are backed by natural resources – primarily oil. If earlier the dollar rate was equal to 250 thousand bolivars, now – 6 million bolivars per dollar. One petro-local Central Bank estimated at 3,600 sovereign bolivars, or a barrel of Venezuelan oil (about $ 60).
Along with this, the sovereign Bolivar itself was denominated – five zeros were removed from the face value. Also, it was announced about an increase in wages by 3000%, which now amounts to 1,800 sovereign bolivars, or approximately $ 30 per month.
However, the measures taken by the President of Venezuela, Nicholas Maduro, are unlikely to help curb hyperinflation, avoid US sanctions and save the economy from collapse. On the contrary, reform can only accelerate the growth of inflation, which by the end of the year can reach a million percent. In addition, there is a massive migration of the population. According to Bloomberg, over the last year more than 400 thousand Venezuelans moved to neighboring Ecuador.