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The new sovereign bolivar was introduced in a bid to tackle hyperinflation

Venezuela ‘paralysed’ by launch of sovereign bolivar currency

WT24 Desk

Venezuela came to a standstill on Tuesday as the country tried to deal with its newly introduced currency.

Thousands of businesses closed in order to adapt to the “sovereign bolivar”, and many workers stayed at home. President Nicolás Maduro launched the new banknotes on Monday, revaluing and renaming the old bolivar currency.

The government says this will tackle runaway inflation, but critics say it could make the crisis worse. The notes went into circulation on Tuesday.

President Maduro had declared Monday to be a bank holiday.

The new currency lops five zeroes off the old “strong bolivar” – meaning a cup of coffee worth 2.5m strong bolivars in the capital Caracas last month now costs 25 sovereign bolivars.

However, people in Caracas told the BBC they were restricted to withdrawing only 10 sovereign bolivars on Tuesday from cash machines.

Separately on Tuesday, Venezuela was shaken by a powerful earthquake along its northern coastal region that was felt in Caracas, where many of the city’s buildings were evacuated.

US seismologists reported a magnitude 7 quake with an epicentre in the east of Venezuela, while the Venezuelan authorities recorded a magnitude 6.3 quake.

Eyewitnesses in the coastal town of Cumana described residents rushing into the streets, according to Reuters news agency. No casualties were reported.

Earlier, cities across Venezuela were virtually deserted as people struggled to get hold of the country’s new banknotes.

Venezuela’s black market in dollars was even frozen by the currency shift amid confusion and economic uncertainty.

The government announced several other key economic changes to accompany the new notes, including raising the minimum wage by 34 times its previous level from 1 September, raising VAT and cutting generous fuel subsidies.

President Maduro also said the sovereign bolivar would be tied to the petro, a virtual currency the government says is linked to Venezuela’s oil reserves.

But the US has banned its citizens from trading in it, and one cryptocurrency site, ICOindex.com, has even labelled the petro “a scam”.

“Anchoring the bolivar to the petro is anchoring it to nothing,” economist Luis Vicente León told AFP news agency.

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