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Venezuela's bolivar weakens against the U.S. dollar as inflation rages

Published 08/03/2023, 07:20 PM
Updated 08/03/2023, 07:26 PM
© Reuters. A customer counts Venezuelan Bolivar notes at a stall in a municipal market in Caracas, Venezuela February 10, 2023. REUTERS/Gaby Oraa
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CARACAS (Reuters) - The Venezuelan bolivar weakened to 30 units per dollar, the central bank said on Thursday, marking the latest descent for the beleaguered local currency as the economy suffers one of the world's highest inflation rates.

Over the past seven months, the bolivar has depreciated by a third compared with the U.S. dollar, according to analysts consulted by Reuters.

President Nicolas Maduro has presided over a prolonged economic meltdown in the oil-rich nation, which was once South America's wealthiest.

The annual rise in consumer prices for June topped 404%, according to central bank data, as analysts predict that inflation will continue to accelerate this year.

Maduro's ruling socialists have sought to control creeping prices by cutting public spending, imposing credit limits and tax hikes since the end of 2021. They have also tried to make foreign currency more readily available to local banks, but the strategies have not tamed the country's galloping inflation rate.

Since early this year, the central bank has offered local banks about $1 billion, according to local firm Sintesis Financieras. Meanwhile, U.S.-based oil major Chevron (NYSE:CVX), which operates in the country, has posted foreign currency sales of around $400 million from February to July.

© Reuters. A customer counts Venezuelan Bolivar notes at a stall in a municipal market in Caracas, Venezuela February 10, 2023. REUTERS/Gaby Oraa

While salaries for public workers remain stagnant, the government does pay bonuses that translate to increased spending.

Maduro has insisted on a fixed exchange rate to anchor his economic strategy, instead of allowing the rate to float freely. The policy spurs a scrabble for more hard currency.

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