The bolívar, Venezuela’s official currency, continues to experience a marked devaluation that is hitting the population’s purchasing power and eroding wages.

As of the end of November, the national currency had lost 8.8 % of its value against the US dollar.

According to experts, the increase in foreign currency leads to higher prices, as well as a loss of purchasing power for workers, especially those who are paid in bolívares.

The minimum wage for workers, as well as the amount allocated to pensioners, is 130 bolívares. With the daily update of the official dollar exchange rate published by the Central Bank of Venezuela, this amount decreases as the days go by.

Tensions between Venezuela and the United States, coupled with the South American nation’s internal problems, exacerbate the economic and financial situation, despite the rebound in some industrial sectors and foreign investment in areas such as agriculture, technology, and energy.

M.Pino

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The legal currency in Venezuela, the bolívar, has lost 30 % of its value so far this year, according to estimates by the independent Venezuelan Finance Observatory (OVF).

According to the independent organization, “for every 1 % the currency depreciates, prices increase by 1 %”. This is attributed by economist José Guerra, a member of the OVF, to the fact that “the Venezuelan economy is informally dollarized, such that when the exchange rate is rising, prices begin to rise.”

The specialist has pointed out that the Central Bank of Venezuela cannot effectively intervene to contain the depreciation of the national currency. “That is, there are not enough dollars to inject into the economy.”

Despite this outlook, which according to the OVF is not encouraging, President Nicolás Maduro has remained optimistic, citing an increase in oil production and declaring that the nation is open to international investment.

The agency’s projections point to a closing of 2025 at 120 bolivars per dollar. “The trend is undoubtedly toward currency depreciation,” Guerra continues. Regarding inflation, they have indicated that it could reach 150 %.

M.Pino

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(Reference image: Juliana Mayo on Unsplash)

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