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Venezuela Makes Currency Changes to Tackle Inflation and Profiteering

ISSN:1060-4189
LADB Article ID: 80241
Category/Department: Venezuela
Date: 2017-03-17
By: Andrés Gaudín

The opposition’s inability to capitalize on popular discontent, and the discovery of criminal actions that, to some degree, confirm government claims that the political right and business class are waging an “economic war,” have together helped Venezuelan President Nicolás Maduro maintain his tenuous hold on power and stave off calls for his removal. Since November 2016, while the population continues to suffer from serious supply shortages and high inflation, the government has collected information on what it calls an “attack on the currency” (the Venezuelan bolivar) and on the increasing flow of contraband across the lengthy border with Colombia. The governments of both countries admit that smuggling, both in terms of volume and value, has reached a superlative level along the porous, 2,216-km border. Much of the illegal trade involves gasoline, which is cheaper in Venezuela than anywhere else in the world, and subsidized Venezuelan foodstuffs. The Maduro administration responded to the situation by pulling the country’s largest-denomination bills (100-bolivar notes, the equivalent of US$0.10) from circulation and introducing even larger-denomination notes and coins ranging from 500 to 20,000 bolivares.

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