Venezuela’s currency no longer fits in ordinary wallets

Dhaka,  Sun,  04 December 2016
Published : 27 Nov 2016, 17:45:03

Venezuela’s currency no longer fits in ordinary wallets

It’s not so easy to find someone who still uses a wallet in Venezuela, where inflation is expected to reach 720 per cent this year and the biggest bill — 100 bolivars — is worth about 5 US cents on the black market.

The currency has dropped dramatically in value as Venezuela’s oil-based economy has cratered and the government has frantically printed more money. Prices, meanwhile, are soaring. So Venezuelans must handle huge volumes of cash — so much that the bills don’t always fit in a standard wallet — with many people packing wads of currency in handbags, money belts or backpacks, reports The Washington Post.

The owner of a tiny kiosk selling newspapers, cigarettes and snacks in one of Caracas’s nicer neighbourhoods said that each evening he quietly stuffs a plastic bag full of the day’s earnings, around 100,000 bolivars (about $52) in notes of 10, 20, 50 and 100 bolivars. This is a country with one of the highest crime rates in the world, and carrying that much cash is dangerous. He said he doesn’t feel safe, despite having his own scooter rather than using public transport.

“All of Caracas is unsafe,” said the 42-year-old kiosk owner, who declined to give his name. Three years ago, the volume of cash he carried home after a long day of work was smaller, he said, “and so were the risks.” He said that his clients usually count out their notes before stepping out onto the street, since they are too scared to be seen holding money in public.

His best-selling item is cigarettes, which have climbed in price from 250 bolivars to 2,000 bolivars, now worth just over $1 on the black market. The sale of one pack of cigarettes alone will add a fresh batch of 20 100-bolivar bills to his earnings.

Down the road, in a different kiosk, a 70-year-old man who identified himself as Augustinho added up his afternoon sales on a tattered sheet of paper. He takes much of his morning earnings home before starting his afternoon shift. “I was robbed at gunpoint once,” he said. “I take all of my 100 notes home in the afternoon.”

On a busy road nearby, a couple of taxi drivers waited idly for their next customers. The eldest, a 70-year-old man who spoke on condition of anonymity, said that customers will sometimes hand over a stack of 100 20-bolivar notes to pay for a 2,000-bolivar fare.

The shrinking value of the currency has meant that withdrawing the equivalent of $5 from the ATM produces a fistful of at least 100 bills. Some ATMs now need to be filled every three hours, since the machines can hold only so much cash. Because of the difficulties in restocking the machines, there are often a limited number of functioning ATMs and endless lines of people waiting to withdraw money.

The hassles over cash have prompted many Venezuelans to pay their tabs with credit cards. The owner of a local cafe, who declined to give his name, said that 90 per cent of his business’s earnings were paid electronically.

Electronic payment is increasingly common in the country, said Henkel Garcia, director of the Venezuelan economic think tank Econométrica. “The use of online payments is likely to have soared.”

But it is expensive for small businesses to buy and set up credit-card machines.

President Nicolás Maduro, who came to power in 2013 and has continued the socialist policies of his predecessor, Hugo Chávez, blames the country’s woes on an “economic war” waged by his opponents in the business community and in the United States. But, in a sign his government recognises the problems with cash, authorities are planning to issue larger-denomination bills in January, according to local press reports.

The notes are reportedly set to start at 500 bolivars and reach 20,000 bolivars, or just over $10.

“They’re necessary for the economy, for the banks and for the people,” said Jose Grasso Vecchio, an economic consultant and former executive technical director of the Venezuelan Bank Association. “The move is a positive one.” - IH

 
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