Venezuelan streets quiet after currency devaluation

CARACAS/VALENCIA, Venezuela (Reuters) - Venezuela’s streets were quieter than normal on Tuesday, as a currency devaluation and package of economic measures by socialist President Nicolas Maduro went into effect, and the opposition asked storekeepers to shut up shop in protest.

A man walks next to closed shops at a municipal market in Caracas, Venezuela August 21, 2018. REUTERS/Marco Bello

The OPEC nation on Monday cut five zeros from prices and pegged the country’s currency to an obscure state-backed cryptocurrency, as part of a broad set of measures meant to address hyperinflation and an economic crisis.

The central bank reported a new exchange rate of 68 bolivars per euro, in line with the 60-bolivar-per-dollar rate that Maduro implied when he announced the new measures on Friday.

That would represent a devaluation of 96 percent from the previous official rate. But the impact of that is limited by the fact that most individuals and businesses were already relying on the black market for hard currency, where dollars currently fetch around 93 bolivars.

Critics slammed the plan as inadequate in the face of inflation that topped 82,000 percent in July and called for a one-day halt of commercial activities.

Many shops closed in downtown Caracas, and opposition politician Andres Velasquez estimated that 60 percent of the population had joined the national strike.

In those stores that opened, items that cost 1,000,000 bolivars last week were remarked with price tags of 10 bolivars.

“All of us have lost (with these measures), and we are falling into an abyss,” Velasquez said at a news conference. “If we don’t stand firm against the regime, we’re going to have this regime forever, which is their plan.”

The Information Ministry did not immediately reply to a request for comment.

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A small group of government supporters marched toward the presidential palace in downtown Caracas to support Maduro’s economic measures.

“I hope they enforce these measures and that the businesses that don’t agree with them are shut down,” said Julio Contreras, 70, an employee of the Caracas municipal government. “We have to take on the businessmen.”

In what could signal such a new wave of confrontation, government officials occupied a local unit of paper packaging company Smurfit Kappa SKG.I, according to a union leader and a tweet by state price-control agency Sundde.

The occupation was the result of worker complaints over a July decision to give them paid vacation rather than keep them on the job, the union said. Salaries in Venezuela are often so low that workers rely on factory cafeterias to get enough to eat.

“This is a temporary takeover for three months, while there is an investigation into what’s happening at the plant,” union leader Rafael Rangel said by telephone from the plant in the central city of Valencia.

Smurfit Kappa’s Investor Relations division did not immediately respond to an email seeking comment.


Fedecamaras, the country’s main business group, slammed Maduro’s economic package as incoherent, and said that a significant minimum wage increase that is part of the plan would make it impossible for businesses to keep their doors open.

At major produce market Quinta Crespo, some stands were closed. Some employees were unable to get to work because they could not find public transportation, which has been in steady decline for months due to lack of auto parts.

“My employees didn’t arrive, and the suppliers didn’t offer much because there is a lot of uncertainty about salaries and prices,” said Jesus Rojas, 36, who runs a fruit stand at the market.

Businesses were largely closed in the second-largest city, Maracaibo, which has suffered months of prolonged power outages, as well as in the smaller cities of Punto Fijo and Valencia. Banks had long lines outside as people sought to withdraw the newly released bills.

The collapse of the country’s once-booming economy has fueled hunger and disease, spurring an exodus of migrants to nearby countries.

Maduro says his government is the victim of an “economic war” led by the opposition with the help of Washington, which last year levied several rounds of sanctions against his government and high-ranking officials.

Additional reporting by Mircely Guanipa in Punto Fijo and Shaylim Castro, Vivian Sequera and Corina Pons in Caracas; Editing by Jonathan Oatis and Rosalba O’Brien