Mar 21, 2018
Hyperinflation strangles Venezuela's economy
A man counts Venezuelan Bolivars. Photo: Wil Riera / Bloomberg via Getty Images
As Venezuela's economy descends into chaos, its currency, the bolivar, has taken a big hit, with one town inventing its own money to get around hyper-inflation and the government developing a state-issued cryptocurrency to evade U.S. sanctions.
In perspective: The black market exchange rate currently sits at 230,941 bolivars to one U.S. dollar, per DolarToday. And Bloomberg is tracking inflation in Venezuela by using the price of a cup of coffee as an indicator. One café con leche is now priced at 80,000 Bolivars, reflecting 4,344% inflation over the last year.
- Paper money is increasingly difficult to acquire in Venezuela, and people have taken to paying cash dealers 100% premiums for it.
- Russia was behind the creation of the "Petro," Venezuela's cryptocurrency, which the U.S. banned its citizens from buying, per a TIME investigation. The Kremlin has denied involvement in the development of the digital currency.
- The town of Elorza has developed its own currency, named for the town, to make it easier for residents and visitors to conduct financial transactions, BBC reports. Residents of Elorza can get the paper money at the mayor's office.
- The country's GDP has shrunk by close to 15% a year for the past two years, and that decline expected to continue in 2018