Plunge Has Citizens Scrambling for Dollars on Black Market; $33 for a Big Mac
By Kejal Vyas
Sept. 29, 2014 7:05 p.m. ET
CARACAS—Venezuela has hit a new, dubious milestone in its slow-motion economic decline: Its largest banknote, the 100-bolívar bill, is worth just one U.S. dollar, at least on the country’s black market.
On Monday, the bolívar held at 100.68 per dollar, unchanged from Friday when it breached the 100 level for the first time, according to DolarToday.com, a significant decline from just 17 per dollar at the start of 2013. DolarToday.com tracks the South American nation’s vibrant currency black market, where many Venezuelans go to get greenbacks and which businesses use as a pricing reference.
The country’s smallest bill, the two-bolívar note, is worth just two U.S. cents on the black market. The situation has left Venezuelans carrying large wads of cash everywhere they go, a risky proposition in a country with one of the highest crime rates in the world.
David Varela, a 43-year-old newsstand owner, collects some 20,000 bolívares a day in revenue, most of it in small bills. So at least once a day, he discreetly fills a duffel bag with cash and hides the money in the trunk of his car. At the end of the workday, he stuffs bills into his socks.
“If they rob me, at least they won’t be able to take it all,” Mr. Varela said on a recent day as he handed a stack of 50s and 20s to a provider delivering a box of chocolates.
The bolívar’s plunge on the black market is only one sign of mounting economic distress in a country that boasts the world’s largest oil reserves. There are shortages of everything from cooking oil to cancer medication as the cash-strapped government makes fewer dollars available for imports. The economy is expected to contract about 2% to 3% this year despite high oil prices.
Venezuela also suffers from one of the world’s highest rates of inflation, though exactly how fast prices are rising is up for debate. The central bank, which has only sporadically published data this year, said inflation sat at an annual rate of 63% last month.