November 28, 2016 / 3:46 PM / 3 years ago

Venezuela currency tanks 60 percent in month on black market

CARACAS (Reuters) - Venezuela’s bolivar currency has depreciated an unprecedented 60 percent in a month against the U.S. dollar on the black market to trade at nearly 3,500 on Monday, according to the widely-tracked web site DolarToday.

A clerk grabs a stack of Venezuelan 10 bolivars banknotes at a fruit and vegetable store in Caracas July 10, 2015. REUTERS/Marco Bello

That makes the largest-denomination note of 100 bolivars now worth less than 3 U.S. cents in the crisis-hit OPEC nation.

Such is the currency chaos that Venezuelans often carry rucksacks full of cash for basic transactions, cashpoints are constantly running out, and some people are disparagingly using bolivar notes like scrap paper.

Local media say thieves, dissatisfied with the meager value of bank-notes, are starting to carry credit card machines to access victims’ accounts during holdups in buses and restaurants.

The bolivar’s crash in recent days is the fastest depreciation on the black market since the ruling Socialists introduced currency controls in 2003.

Under the exchange scheme, President Nicolas Maduro’s government offers a limited supply of dollars at 10 bolivars for priority imports such as food and medicine, and at 660 bolivars for other items.

But with demand outpacing supply, many use the black market, where the U.S.-based DolarToday site remains the main marker though the government calls it an illegal operation intended to sabotage the economy. DolarToday priced the greenback at 3,480 on Monday - up from 2,972 at the weekend, 2,193 last week, and 1,417 a month ago.

Venezuela’s official inflation rate hit 181 percent in 2015 and economists predict it will be far worse this year and next, though authorities have long stopped publishing monthly data.

Monetary liquidity, a measure of total money supply, has also increased 111 percent so far this year, according to central bank data.

Chronic shortages over the last two years have eased slightly in recent months. But that is mainly due to goods imported at the black market rate, which puts them out of reach for most in a nation where the minimum wage is 27,000 bolivars or around $8 on DolarToday.

Huge lines remain at shops for state-subsidized goods.

Baptized the “bolivar fuerte” or “strong bolivar” by former leader Hugo Chavez in a 2008 devaluation that removed three zeroes from the currency, many Venezuelans joke grimly that it is now the “bolivar muerto” or “dead bolivar”.

Critics say 17 years of failed socialist policies have wrecked the Venezuelan economy, while Maduro accuses opposition politicians, businessmen and the United States of waging an “economic war” against him.

Reporting by Andrew Cawthorne and Eyanir Chinea; Editing by Marguerita Choy

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