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Sovereign Bolivar

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Main article: Venezuelan bolívar

The Sovereign Bolivar (Bolívar Soberano, plural: Bolívares Soberanos) is a currency introduced in Venezuela on August 20, 2018 to replace the bolivar fuerte that has experienced hyperinflation. Banknotes in the new series of banknotes will be issued in denominations of 2, 5, 10, 20, 50, 100, 200 and 500 sovereign bolivars.[1]

History

On 22 March 2018, President Nicolás Maduro announced a new monetary reform program, with a planned revaluation of the currency at a ratio of 1 to 1,000.[2] The change was to be made effective from 4 June 2018.[3][4]

In May 2018, the government required prices to be expressed in both bolívares fuertes and bolívares soberanos at the then-planned rate of 1,000 to 1. For example, one kilogram of pasta was shown with a price of BsF. 695,000 and BsS. 695. Prices expressed in the new currency were rounded to the nearest 50 céntimos as it was expected to be the lowest denomination in circulation at launch. A difficulty with the lowest denomination of 50 céntimos appeared that some items and sales qualities are priced at significantly less than 0.50 BsS., for example a litre of gasoline and the Caracas Metro ticket typically cost BsS. 0.06 and BsS. 0.04, respectively.[5]

In June 2018, annual inflation in Venezuela topped 46,000 percent.[6] The President delayed the planned June launch date of the bolívar soberano, citing from Aristides Maza, "the period established to carry out the conversion is not enough".[7] The revaluation was rescheduled to 20 August 2018.[8]

At the end of July 2018, President Nicolas Maduro announced that the reform would be held on August 20, 2018 at the rate of 100,000: 1. It was also announced that the new currency will be tied to the petro crypto-currency in the ratio: 1 petro = 3,600 sovereign bolivars.[9]

Launch

On 20 August 2018, the Maduro government launched the new bolívar soberano currency.[10] One bolívar soberano was worth a hundred thousand bolivar fuerte. New coins in denominations of 50 céntimos and 1 bolívar soberano, and new banknotes in denominations of 2, 5, 10, 20, 50, 100, 200 and 500 bolívares soberanos were introduced.[11] Under the country's fixed exchange rate to the US dollar the new currency was devalued by roughly 95% compared to the old bolivar fuerte.[12] Additionally, the new bolívar soberano is supposed to have a fixed exchange rate to the petro cryptocurrency, with a rate of 3,600 bolívares soberanos to one petro which is supposedly tied to the price of a barrel of oil (about US$60 in August 2018).[13][14][15] As of the end of August 2018, there is no evidence that petro is being traded.[16]

Simultaneously, on August 20, 2018, the minimum wage was raised to 1,800 sovereign bolivars per month[17] (a 33 fold increase[18]) and sales tax increased from 12% to 16%.[18]

Initially, during a transition period the bolívar soberano was to be run alongside the bolívar fuerte.[19] However, from the start of the transition, on 20 August, bolívar fuerte notes of 500 and less could not be used; they could only be deposited at banks.[20]

According to DolarToday, the estimated exchange rate was 71.2 VES/USD on Venezuela's free market on 22 August 2018.[21] The rate varied considerably for other references - AirTM's exchange rate was 75.6 VES/USD.[22][23]

Bank notes

References

  1. ^ Venezuela Delays New Currency Rollout, Slashes More Zeroes - Bloomberg
  2. ^ López, Abel (2018-03-22). "Maduro anuncia nueva reconversión monetaria". El Nacional (in Spanish). Retrieved 2018-03-22.
  3. ^ "Venezuela to revalue ailing bolivar currency from June 4". Nasdaq. 2018-03-22. Archived from the original on 2018-03-23. Retrieved 2018-03-22. {{cite news}}: Unknown parameter |dead-url= ignored (|url-status= suggested) (help)
  4. ^ "Ya está en Gaceta Oficial decreto de reconversión monetaria". Panorama (in Spanish). Retrieved 2018-03-26.
  5. ^ Web, El Nacional (2018-04-29). "Comenzaron a aparecer productos con precios el bolívares soberanos". El Nacional (in Spanish). Retrieved 2018-04-30.
  6. ^ Venezuela to remove five zeroes from ailing currency - Reuters
  7. ^ WEB, EL NACIONAL (2018-05-29). "Maduro pospone entrada en vigencia de la reconversión monetaria". El Nacional (in Spanish). Retrieved 2018-05-29.
  8. ^ "Inflation-hit Venezuela to remove five zeros from currency". Deutsche Welle. 26 July 2018. Retrieved 2018-07-26.
  9. ^ Venezuelans to Be Paid at Least Half a Petro a Month - Bitcoin.com
  10. ^ "With 1,000,000% inflation, Venezuela slashes five zeroes from its bills". Retrieved 22 August 2018.
  11. ^ Litzmayer, Owen (5 Apr 2018). "Venezuela | Banknote News". www.banknotenews.com. Retrieved 2018-05-08.
  12. ^ Hopps, Kat (21 August 2018). "Venezuela crisis: How much is the bolivar worth today? Bs to USD to GBP". Retrieved 22 August 2018.
  13. ^ Lam, Eric (20 August 2018). "Here's What Maduro Has Said of Venezuela's Petro Cryptocurrency". Bloomberg News.
  14. ^ Phillips, Tom (20 August 2018). "Venezuela devalues currency and raises minimum wage by 3,000%". the Guardian. Retrieved 22 August 2018.
  15. ^ "Venezuelans to Be Paid at Least Half a Petro a Month - Bitcoin News". 18 August 2018. Retrieved 22 August 2018.
  16. ^ Ellsworth, Brian (30 August 2018). "Special Report: In Venezuela, new cryptocurrency is nowhere to be..." Reuters. Retrieved 7 September 2018.
  17. ^ Venezuela just devalued the bolivar by 95% and pegged it to a cryptocurrency - Business Insider
  18. ^ a b "Venezuela hikes wages ahead of monetary overhaul". Washington Post. 2018-08-17. Retrieved 2018-08-24. {{cite web}}: Cite has empty unknown parameter: |dead-url= (help)
  19. ^ "Venezuela rolls out new currency amid rampant hyperinflation". Al Jazeera. 20 August 2018. Retrieved 22 August 2018.
  20. ^ https://mriguide.com/venezuela-bolivar-soberano-transition/
  21. ^ "Indicadores Economía Venezolana". dolartoday.com (in Spanish).
  22. ^ "AirTM (@theairtm) - Twitter". twitter.com. Retrieved 22 August 2018.
  23. ^ "Venezuela's Currency Is Doing Even Worse Than Previously Thought". Bloomberg.com. 2018-04-04. Retrieved 2018-04-06.
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