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Venezuela says to issue bigger notes 'very soon' as inflation surges
December 3, 2016 / 1:37 AM / 10 months ago

Venezuela says to issue bigger notes 'very soon' as inflation surges

People line up to withdraw cash from an automated teller machine (ATM) outside a Banco de Venezuela branch in Caracas, Venezuela November 25, 2016. Picture taken November 25, 2016. REUTERS/Marco Bello

CARACAS (Reuters) - President Nicolas Maduro said on Friday Venezuela would issue higher denomination bills “very soon” as soaring inflation and a crumbling currency leave the crisis-stricken country’s largest note worth just 2 U.S. cents on the black market.

Still, the long-awaited entry of 500 and 5,000 bolivar notes will only bring a brief respite amid rapid money printing and a weakening currency.

Today 5,000 bolivars buy just over $1 on the black market, which exists because Venezuela introduced currency controls in 2003 but does not offer enough dollars to meet demand.

Venezuela is believed to have the world’s highest inflation, although no data has been published for 2016. Money supply rose 12 percent in the last two weeks while the bolivar weakened 65 percent in the last month.

As a result, Venezuelans often carry backpacks full of bills and cash machines frequently run dry due to long queues.

“Several million bills of 500 bolivars and then several million bills of 5,000 bolivars will enter circulation very soon,” Maduro said in a televised address, noting that the central bank would provide details on Sunday and Monday.

People cross to Venezuela over the Simon Bolivar international bridge after shopping in Cucuta, Colombia December 1, 2016. REUTERS/Marco Bello

Adding to the currency chaos, Venezuela’s credit card readers, already shaky, suffered chronic malfunctions on Friday. Unable to process transactions, stores had to ask clients to use cash, transfers, or pay later.

Maduro blamed a “cyber attack” and said he was sending the Sebin intelligence service to Credicard, a payment processor, to take “all legal actions.”

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“Today we suffered an international cyber attack on our base platform, the internet’s technological platform,” Maduro said at an event with community groups in charge of food distribution. “We’ve already detected where the attack came from. It affected the entire capacity for internet exchanges to...provoke a state of collapse and desperation.”

Maduro’s critics say he is seeking scapegoats for 17 years of inept Socialist rule and a corrupt, inefficient state-led economy. Lack of investment, price-fixing that hurts companies, and theft at installations have led to a sharp deterioration of the telecommunications industry. “It’s not the fault of cash machines or the internet, it’s this model that has brought us to misery,” tweeted opposition lawmaker Armando Armas.

Credicard tweeted late on Friday night that card readers were working again, without specifying what the problem had been.

Still, Venezuelan businesses took another hit in the midst of a brutal recession that has millions skipping meals.

“One credit card would go through, then none at all, the online transfers didn’t work, checks neither, and there’s no cash,” said Marian, a supervisor in a food store. “It’s been total chaos. There were big losses today, clients dropped products and left.”

Editing by Mary Milliken

Our Standards:The Thomson Reuters Trust Principles.
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