The dollar skyrockets in Venezuela and families rush to buy food for fear of further hikes and shortages

Venezuelans are hoarding food, among other supplies, nervous about the sharp rise experienced by the dollar in the South American country, after a period of moderate increases that have given calm and have been welcomed as a balm for the inconveniences suffered in four years of hyperinflation.

“I pulled my dollars out from under the mattress to weather this storm, prices went up overnight,” said Olga Romero, a 46-year-old employee who transported rice, sugar, oil, corn flour. corn, among other staples, which are among those that have risen the most in price in the past two weeks.

“I have relatives who don’t have dollars who are already having a hard time, because now more than ever they don’t have enough bolivars to buy,” added the woman, who works in a private company that pays part of her salary in dollars.

“I hope this doesn’t drag on as it did before,” he added, alluding to the recent troubled times of four-digit hyperinflation.

Devaluation

This nervousness is due to the exchange rate on the black market went from 6.67 to 9.08 bolivars per dollar between August 18 and 24, according to the portal “Monitor Dolar Vzla”, while the official rate went from 5.97 bolívares to 7.01 bolívares, the highest level since October 2021, when a new currency with six zeros in less to facilitate Bolivar accounts and encourage the use of the national currency.

In Venezuela, there are several portals that publish changes in the dollar on the black market on a daily basis.

At first, the government tried to block those internet pages and even arrested some of the owners of those sites, accusing them of spreading false currency quotes in order to destabilize the Venezuelan economy, promote currency speculation and destroy the national currency. devalued.

But over time it has given up trying to prevent its publication, while many operate from abroad.

Exchange rate gap

On 6 October, the first day of operations with the new currency, the dollar was quoted at 4.19 bolivares per dollar and until last May it remained stable at around five bolivares per dollar.

For years they have lived together two exchange rates in Venezuela: That of the Central Bank of Venezuela (BCV) and that of the black market. The gap between the two generates strong price distortions and in trade in general, for which historically it has been instrumental in the increase in inflation, according to experts.

Therefore, to try to stop it, the indistinct use of bolivars and currencies, including cryptocurrencies, was legalized two years ago.

Several analysts agree that the rebound in the exchange rate would be partly a consequence of the Central Bank offering an insufficient amount of foreign currency on the foreign exchange market, along with many Venezuelans, individuals and businessmen, due to mistrust of the country’s monetary authorities. they try to protect their funds by buying dollars on the black market.

“Venezuela is a country that has long since lost faith in its currency, the bolivar, with which any surplus of bolivars is exchanged by people for goods or dollars. This needs to be understood,” he said. Associated Press Asdrúbal Oliveros, economist and director of the local analysis company Ecoanalítica.

Oliveros indicated that last week the government of President Nicolás Maduro injected more bolivars than it had done as part of the execution of his expenses, while the supply of foreign currency from the BCV was reduced to a minimum.

The coincidence of a massive bolivar injection with a minimal, almost non-existent supply of dollars, it caused “a disaster”, as all that demand has been shifted to the black market where foreign currency is scarce and this has pushed the dollar price up, the analyst pointed out.

Central Bank spokespersons were unavailable for comment, and the issuing entity did not publish any reports to reassure the market either.

uncertainty and fear

In Venezuela, where wages are set in bolivars and prices refer to their dollar value, any abrupt change in the exchange rate triggers alarms.

“We are starving, Maduro says the economy is fine, but I don’t feel it in my pocket or stomach,” said Ángel González, complaining that a kilo of meat has risen to 117.13 bolívares or 15% in just eight days and the money is barely enough to buy a kilo a week for a family of four.

Like González, most Venezuelans have a precarious income level. The World Health Organization stressed that Venezuelans accuse a food deficit.

The minimum wage was raised last March to around 126 bolivars a month, which was then equivalent to around $ 27.13. That salary now represents $ 17.97 at the official exchange rate. The previous minimum wage was equivalent to $ 1.47 per month.

The hike in the exchange rate came two days after Maduro announced that the Venezuelan economy has experienced sustained double-digit growth since the middle of last year and that projections for the rest of 2022 are favorable after six years of recession. .

Citing data from the BCV, Maduro indicated that in the third quarter of last year the growth was 14.65% and between October and December of 19.07%. In the first quarter of 2022, meanwhile, Venezuela experienced growth of 17.04%, and for the second quarter of this year, an increase of 18.07% is expected, he added.

Source: AP

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