Maduro orders 96 % devaluation in hyperinflation-stricken Venezuela
Reuters: Venezuela’s president Nicolas Maduro announced on Friday a single exchange rate pegged to his socialist government’s petro cryptocurrency, effectively devaluing by 96 percent in a move economists said would fan hyperinflation in the chaotic country. In one of the biggest economic overhauls of Maduro’s five-year government, the former bus driver and union leader also said he would hike the minimum wage by over 3,000 percent, boost the corporate tax rate, and increase highly-subsidized gas prices in coming weeks.
“I want the country to recover and I have the formula. Trust me,” Maduro said in a nighttime speech broadcast on state television.
But economists expressed doubts that Venezuela’s cash-strapped government, which faces U.S. sanctions and has defaulted on its bondholders, would succeed.
Venezuelans will see their meager salaries further erodedand companies will struggle with major increases to both taxes and the minimum wage, they said.
“Amid this aggressive devaluation and monetary expansions due to salaries and bonuses, we are expecting a much more aggressive stage of hyperinflation. All the more so in a context where the elimination of excessive money printing is not credible. The worst of all worlds,” said Venezuelan economist Asdrubal Oliveros of consultancy Ecoanalitica.
The International Monetary Fund has predicted that inflation in Venezuela would hit 1 million percent this year.