The Inflation rate in Venezuela is predictable to be 720 % this year, with the biggest Bolivar bank note now to be valued at just US5 cents on the black market. Few shop cashiers reported that they have started weighing rather than counting the pack of cash which consumers offer to them, and normal size purse has become useless in the South American regions. Many citizens now carry a large amount of cash in handbags, money belts, or backpacks instead of wallets. The scene shows hyperinflation and its effects.[irp]
In 2014, the dropping international oil prices destroyed the economy of Venezuela. To fix the issue, President Nicolás Maduro reacted by altering the currency exchange rate and ordered banks to produce more money, which eventually undervalued the cash, while goods prices rose. Jesus Casique, a consulting company executive, told the news site that even this method of weighing cash was not very common everywhere, it was an indication of a monetary disaster. He said that when we start weighing cash instead of counting it shows the rise in inflation. It is worst that Venezuelans don’t realize how terrible it is because the authorities do not announce the facts and figures.
Humberto Gonzalez, who runs a meat and cheese selling shop in the city, said that he uses similar scales to weigh and assess pieces of salty white cheese and the tons of bills which consumers handed over to him. Mr. Gonzalez told Bloomberg that it is a very sad thing and at this point, he believes that the cheese values more. Oil accounts for an amazing 95% of the Venezuela's exports, and one-fourth of the country's economy, with the generated revenues fulfilling approximately half the government’s budget. This kind of dependency on only a single export discourages all the other businesses in the country and this is known by economists as Dutch Disease.
When the price of oil in the universal market distorted in 2014 by two-third, Venezuela had nothing much for its backup. So, an ordinary response would have been for the Bolivar to fall. But Mr. Maduro, who died in 2013, as a substitute attempted to alter the exchange rate, generating a gigantic black market for money. Buying dollars and selling them for Bolivars set a feedback loop which increases inflation. The 42-year-old owner of a small newspaper kiosk told that he gently fills a plastic bag with his daily income, approximately 100,000 Bolivar (around £42) in notes of 10, 20, 50 and 100 Bolivars. Venezuela has one of the highest crime rates and he is afraid to lose his money while carrying to another place.[irp]
The ATM machines need to be refilled every 4 hours. The value of money dropped to the ground. Bremmer Rodrigues, the owner of a bakery, said that it is difficult to manage his daily hundreds of bills. He hides the cash in his office, stacks of cartons to carry it to the bank. He said if anyone sees him like this, he might be misguided for a drug trader.
Source: Independent UK