Saturday, December 17, 2016

Cash chaos as Venezuela stuck in currency limbo

Venezuelans lined up today to deposit 100-unit banknotes before they turned worthless, but replacement bills had yet to arrive, increasing the cash chaos in the country with the world’s highest inflation.
Some frustrated customers received expiring 100-bolivar notes when they withdrew money at ATMs, then immediately had to line up again to re-deposit them.
Venezuelans are stuck in currency limbo after President Nicolas Maduro ordered the 100-bolivar note — the largest denomination, currently worth about three US cents — removed from circulation in 72 hours.
The government announced today that Venezuela’s borders with Colombia and Brazil — closed to fight “mafias” allegedly hoarding the notes — will stay shut three more days.
The deadline was supposed to coincide with the launch of a 500-bolivar bill, the first in a new series of banknotes that will eventually be issued in denominations of up to 20,000 bolivars.
But with the new bills yet to arrive in the capital Caracas by midday, people were left facing economic chaos.
“I don’t get the joke,” office worker Yarelis Carrero said. “When you withdraw cash at the ATMs, they give you 100-bolivar bills. And you can’t get the new ones inside the bank, either.”
She woke up early to get rid of her expiring banknotes only to discover that the bills meant to replace them were nowhere to be found.
Venezuelans will now be able to exchange 100-bolivar bills only at one of the central bank’s two headquarters buildings.
Maduro, who has presided over an unraveling of Venezuela’s oil-rich economy, said the 100-bolivar note had to be killed because “mafias” were hoarding it abroad in what he called a US-backed plot to destabilize Venezuela.
In response, he sealed the borders with Colombia and Brazil, where he says much of the hoarding is happening. Now those frontiers will stay shut until Sunday.
That led to pandemonium on the border, as foreigners rushed home and Venezuelans found themselves cut off from precious supplies of food, medicine and basic goods that are in desperately short supply in Venezuela.
Central bank chief Nelson Merentes promised last week that “millions and millions” of new bank notes were on their way.
The new bills — which are being printed abroad — were originally meant to circulate alongside the old ones during a transition period.
But Maduro axed that plan when he issued his decree against the 100-bolivar note on Sunday.
It accounted for 77 percent of the cash in circulation in Venezuela, according to official figures.
Venezuelans had grown used to carrying around huge stacks of them for even the smallest purchases.
Now they are stuck with even bigger piles of 10-, 20- and 50-bolivar notes just as the Christmas shopping season is at its height. Some companies have stopped dealing in cash altogether.

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