Venezuela to slash six zeroes from currency

AFP

Venezuela will slash six zeroes off its inflation-battered currency the bolivar to make it easier to use, the central bank said on Thursday.

The change will take effect on October 1 with the issuance of new currency notes, called the digital bolivar.

“All monetary amounts expressed in national currency will be divided by one million,” the central bank of President Nicolas Maduro’s beleaguered leftist government said.

It said the goal of the change is to “facilitate” the use of the bolivar.

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It is the third time in 13 years that Venezuela — suffering the worst economic crisis in its modern era — has used such a measure.

In August 2018, the government lopped five zeros off its bank notes, having taken off three in 2008.

In 2018, the government replaced the ironically named strong bolivar with the sovereign bolivar.

The once-wealthy oil producer is enduring its fourth year of hyperinflation and its eighth year of recession.

From January through to May prices rose 265 percent.

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Inflation was almost 3,000 percent in 2020 and more than 9,500 percent the year before, according to central bank figures.

“It was an expected decision,” economist Cesar Aristimuno, director of Aristimuno Herrera & Associates, told AFP.

“By itself it was necessary … the billing and accounting processes for companies were already practically impossible.”

People had even resorted to using a shorthand for prices, saying “thousands” instead of “millions.”

There is such a shortage of bolivars that long queues are a regular sight outside banks.

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Transactions made in the local currency are usually done by card payment or bank transfer rather than in cash.

Inflation is so bad that the everyday economy now works mainly in dollars, with many stores listing prices in the US currency.

Back in May the government tripled the minimum monthly wage but the new amount was still not even enough to buy a kilogram of meat.

However, Aristimuno warned that while “convenient” this measure will not transform Venezuela’s battered economy.

“We cannot hope for economic miracles from this decision, taking into account that … it comes without any underlying economic announcements” that could reduce inflation or boost GDP.

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The Maduro government is under international sanctions championed by the United States, which is pushing for his ouster and does not recognize him as the country’s legitimate president.

With the currency overhaul, the central bank will issue new notes with face values of five, 10, 20, 50 and 100 bolivars and a one-bolivar coin, Communications Minister Freddy Nanez said on Twitter.

US panel backs Trump-themed coin amid controversy

The United States Department of the Treasury confirmed to AFP that the Commission of Fine Arts approved the design of a new collectible coin featuring Donald Trump, with members of the commission appointed by the current administration.

According to the proposal, the coin will feature an image of Trump standing with clenched fists over a desk on the obverse, while the reverse will display an eagle, a traditional symbol of the United States.

The sale price of the collectible has not yet been disclosed, although the United States Mint typically offers similar items for more than $1,000.

“There is no more iconic portrait for the front of these coins than that of our president Donald Trump,” U.S. Treasurer Brandon Beach said in a statement sent to AFP. He added that two additional coins — a $1 piece and a one-ounce gold coin — are also under consideration.

However, the Citizens Coinage Advisory Committee (CCAC), another body responsible for reviewing new coin proposals, declined to discuss the Trump design in late February.

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“Only nations governed by kings or dictators place the image of a sitting leader on their currency,” said Donald Scarinciat the time. “No country in the world has minted coins featuring a democratically elected leader during their term in office,” he added.

When contacted by AFP, the Treasury Department did not immediately respond to requests for further comment.

International

Fed’s Waller warns of rising inflation risks amid Middle East conflict

Christopher Waller, a governor at the Federal Reserve, said Friday that he is increasingly concerned about the inflationary impact of the ongoing conflict involving United States and Israel against Iran, particularly due to the prolonged closure of the Strait of Hormuz.

Waller, who had supported interest rate cuts over the past year amid concerns about the labor market, said he has shifted his stance in recent weeks due to rising inflation risks.

“Since the Strait of Hormuz was closed, it suggests this conflict could be much more prolonged and that oil prices will remain elevated for longer,” Waller said in an interview with CNBC.

“Therefore, this indicates that inflation is a greater concern than I had previously assessed,” he added.

Waller also backed the Federal Reserve’s decision earlier this week to keep interest rates unchanged, signaling a more cautious approach as global geopolitical tensions continue to affect economic outlooks.

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International

Brazil offers to mediate Colombia-Ecuador tensions, calls for restraint

The government of Brazil has offered to mediate in the ongoing tensions between Colombia and Ecuador, while calling on both nations to exercise restraint.

In a statement released Wednesday, Brazil’s Ministry of Foreign Affairs urged the parties involved to act with moderation and seek a peaceful resolution to the dispute.

“Brazil encourages all sides to act with moderation in order to find a peaceful solution to the controversy. It stands ready to support dialogue efforts aimed at preserving peace and security in the region,” the statement said.

Brazil also expressed “serious concern” over reports of deaths in the border area between Colombia and Ecuador, noting that the circumstances surrounding the incidents have not yet been clarified.

The diplomatic move comes amid rising tensions between the neighboring countries, increasing regional concern over stability and security along their shared border.