Venezuela to switch higher denomination currency note with coins

World - Mohit Shah - Dec 12,2016

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venezuela to switch higher denomination currency note with coins

Inflation-hit Venezuela declared on Sunday that it will pull out its higher currency bills and replace them with coins in the next 72 hours. 

Economic crisis in Venezuela has caused the inflation rate to break several worldwide records. The government has decided to withdraw the circulation of the largest currency note which is worth two U.S. cents. 

The plan has been initiated this week and the deadline is stated to be 72 hours. President Nicolas Maduro said that the 100-bolivar bill will be isolated from being circulated on Wednesday; after this, the Venezuelans will be granted 10 days so as to exchange those notes by visiting the central bank. 

Authorities are hoping that the swapping program of 100-bolivar notes will help in restricting smuggling and counter the most alarming issue of food shortage in Venezuela.

However, this step by Nicolas Maduro is expected to extend the intensity of cash crunch which is already existing in Venezuela. 

 “When ineptitude governs! Who would possibly think of doing something like this in December amid all our problems?" were the words of opposition leader Henrique Capriles. Moreover, critics have also shown strict concerns related to the ‘impossible’ execution of the swapping program under the allotted time. 

According to the data managed by the Central Bank in the month of November, the count of 100-bolivar bills in circulation was more than six billion, which makes up a total of 48% share among all the bills and coins in Venezuelan currency. 

The authorities will start the introduction of six new notes along with three new coins from Thursday. The largest coin denomination is expected to be worth 20,000 bolivars, which will hold a value somewhere less than $5. 

As per the inflation figures of December 2015, the surge was stuck at 180%. This year, no official numbers are provided but according to economists the count has surely reached up to 500%.