There seems to be a decent amount of confusion over the Venezuelan inflation, and particularly about how many bolivars you can get for a single USD. Hopefully in this short article I can clear it up a bit.
First off: Venezuela is currently suffering from hyperinflation. This means that their currency is worth significantly less when compared on the world stage, because their prices are skyrocketing so much that inflation metrics are practically meaningless.
Venezuelan Inflation Explained
There are two principle markets we need to look at: the free market (black market) exchange rate, and the Dipro.
The Dipro is the countries official exchange rate system. It hovers around 1 USD for 10 Bolivars. The Dipro is controlled by the Venezuelan government, and is used only to purchase essential goods abroad. It can be devalued only by the banking systems in the country.
In the open market, the Venezuelan currency trades for significantly higher. On December 1st, 2017, the bolivar traded in the open market at about 103,000 Bolivar per USD.
Compare this to December 1st, 2016 when it was (still severe) trading at 4,300 Bolivar per USD. Also in December 2016, the 100 Bolivar note, Venezuela’s largest denomination of currency at the time, was only worth about $0.023 USD on the black market.
DolarToday publishes these black market figures (The Venezuelan government does not allow it within the country). As of the writing of this article, it is currently at 136,582 per USD.
In effect, the Bolivar is practically useless for international currency. It buys nothing. And because of this hyperinflation – anyone who has saved up a vast amount of money in Venezuela, has now discovered their savings and money are worth practically nothing.
Everyone in the country is trying to trade their Bolivars for USD (or other foreign currency), because the Bolivar is worthless even inside of Venezuela. This drives up the demand for outside currency, further devaluing the Bolivar.
Because of the skyrocketing inflation, the Venezuelan government has even had to create and distribute a new 100,000 Bolivar bank note. Which is worth about $0.73.
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“worth a little less than 3 quarters” LOLOLOLOL