The currency is worthless in Venezuela
By Silvia Canto, Jr. in American
Thinker
Once upon a time, circa 1980, I
visited Venezuela. The exchange rate was 4.29 Bolivares for one U.S.
dollar. The city of Caracas was alive, and the restaurants were
fantastic. I'm not saying that the country was perfect, but things were
doing a lot better.
Just a month ago, $1 was worth 279
bolivars. That was already pretty dismal for Venezuela. Now $1 equals 408
bolivars, according to the unofficial exchange rate, which most Venezuelans get
when they try to trade currency.
Put another way, one bolivar equals
$0.002 -- less than a penny. The country's currency has lost nearly half its
value since the beginning of May, according to dolartoday.com, a
website that tracks the unofficial exchange rate.
It's another sign that Venezuela is
arguably the world's worst economy. Venezuela primarily relies on oil
exports to support its economy, which was already under pressure before oil
prices tanked in the fall and winter.
A bolivar less than an American
penny?
We are watching the results of Hugo
Chávez's populism financed by high oil prices. It was a great plan as
long as oil was $140 a barrel. It kept a corrupt and highly inefficient
public sector going, a source of a lot of political jobs and votes on election
day.
It's not that way anymore. Oil
at $50 is not enough to pay the freight.
The government owes about $5 billion
in debt payments then, and there are few convincing signs that Maduro and his
government can pay the bills. Venezuela could default on its debt in October,
sending the country further into economic mire.
How likely is it that Venezuela will
default? I would say very likely if oil prices stay in double-digits
in the near future.
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