The new currency lops five zeroes off the old “strong bolivar.” The government say this will tackle runaway inflation. But for the moment thousands of businesses closed in order to adapt to the “sovereign bolivar” and many workers stayed at home. However Venezuela is a paralysed country. Ordinary people are concerned to the future. Some in the opposition called for a strike but many people are simply staying at home out of uncertainty, too concerned about what the new currency will mean.
3,500,000 bolivars was the old price for a bar of soap
The government announced several other key economic changes to accompany the new notes, including raising the minimum wage by 34 times its previous level from 1 September, raising VAT and cutting generous fuel subsidies. Mr Maduro not offered more details on a petrol price system, saying that he wants a plan that includes direct subsidies to registered public transport operators and individual vehicle owners. Those not registered won’t receive a subsidy and will have to pay international prices.The minimum wage will be set at 1,800 sovereign bolivars, President Nicolas Maduro said in a speech broadcast on state television. President Maduro also said the sovereign bolivar would be tied to the petro, a virtual currency the government says is linked to Venezuela’s oil reserves. There is scepticism in the nation. “Amid this aggressive devaluation and monetary expansions due to salaries and bonuses, we are expecting a much more aggressive stage of hyperinflation. All the more so in a context where the elimination of excessive money printing is not credible. The worst of all worlds,” said Venezuelan economist Asdrubal Oliveros.