Chaos and confusion erupted across Venezuela, and most stores were shuttered on Saturday, after president Nicolas Maduro announced that the government would enact a massive currency devaluation, implement a new minimum wage, hike taxes, and also raise gasoline prices for most citizens even as the country struggles with the greatest hyperinflation on record, surpassing even that of the Weimar Republic.
As a result of the enacted actions, the new version of the bolivar will be pegged to the value of the state cryptocurrency, the etro, which according to Bloomberg amounts to a 95% devaluation of the official rate, and will trade in line with where the black market was; the government will also raise the minimum wage more than 3,000 percent, which works out to about $30 a month.
Maduro said the new currency, set to enter circulation on Monday, will be called the “sovereign bolivar” and will be based on the petro, which is valued at $60 or 3,600 sovereign bolivars, after the redenomination planned for August 20 slashes five zeroes off the national currency. The minimum wage will be set at half that, 1,800 sovereign bolivars. The government would cover the minimum wage increase at small and medium-size companies for 90 days, Maduro added. It was not clear what happens after.
“They’ve dollarized our prices. I am petrolizing salaries and petrolizing prices,” Maduro explained in a Friday televised address. “We are going to convert the petro into the reference that pegs the entire economy’s movements.” – READ MORE
[divider][/divider]Jittery Venezuelans on Friday rushed to shops and lined up at gas stations on concerns that a monetary overhaul to lop off five zeros from prices in response to hyperinflation could wreak financial havoc and make basic commerce impossible.
Shoppers sought to ensure their homes were fully stocked with essentials such as food and dry goods and their tanks full before the measure decreed by President Nicolas Maduro takes effect on Monday.
Inflation hit 82,700 percent in July, according to the opposition-run congress, as the country’s socialist economic model continued to unravel, meaning purchases of basic items such as a bar of soap or a kilo of tomatoes require piles of cash that is often difficult to obtain.
“I came to buy vegetables, but I’m leaving because I’m not going to wait in this line,” said Alicia Ramirez, 38, a business administrator, leaving a supermarket in the western city of Maracaibo. “People are going crazy.” – READ MORE
[contentcards url=”https://www.zerohedge.com/news/2018-08-19/venezuela-chaos-after-maduro-announces-massive-95-devaluation-new-fx-rate-tied” target=”_blank”]