The Washington PostDemocracy Dies in Darkness

Venezuela is swept by economic chaos as new currency plan takes effect

A man displays new 2 sovereign bolivar banknotes in Caracas. Venezuelans on Tuesday began confronting a currency devaluation and new economic measures that many feared could make the situation worse. (Manaure Quintero/Bloomberg)

CARACAS, Venezuela — Many Venezuelans rejected an opposition call for a national strike on Tuesday, warily going to work even as sweeping government measures aimed at curbing ­hyperinflation caused mounting confusion.

With inflation hurtling toward 1 million percent and hunger spreading nationwide, President Nicolás Maduro on Friday outlined a radical plan intended to break the cycle. Among the changes: officially devaluing the currency by about 90 percent and hiking the minimum wage by 3,000 percent.

By Tuesday, one measure in the government’s offensive — the erasing of five zeros from bolívar notes — had already started its rollout. In Caracas, the capital, both the new and old currencies were being accepted in outdoor marketplaces and stores. Under the change, the highest bolívar bill — previously 100,000 — is now 1. 

In a news conference, opposition leader Andrés Velásquez estimated that 60 percent of private-sector workers participated in the strike throughout the country.

“It’s only the first step of a series of protests that will end with a call for a general strike that lasts indefinitely,” he said.

Yet Maduro’s opposition is divided and weakened, and there were signs that the calls for the strike were not being heeded. In Caracas, some stores closed while their owners tried to calculate new prices. But most supermarkets, bakeries and shopping centers were operating.

There were reports of wider participation in the strike in some cities — but analysts said that many stores were closing less out of protest and more out of confusion over what prices to charge. Experts cited a lack of coordination and flagging faith in the opposition, as well as fears of government reprisals, as reasons for the limited impact of the action. 

“Their call was too rushed and confusing,” said Félix Seijas, a political analyst and director of the Delphos polling agency. “The opposition leadership is being questioned and not trusted right now, and they didn’t coordinate with other sectors before making the announcement.”

With economists saying the new economic measures could make a bad situation even worse, people rushed to supermarkets and gasoline stations to stock up on necessities, while some business owners considered closing for good.

Maduro says he has a plan to fix the economy — but it could make things worse

People lined up Tuesday to get the new bolívar bills at ATMs, where daily withdrawals are limited to barely enough to buy three dozen eggs. At stores, shoppers stared, befuddled, at prices marked in both old and new bolívares.

“I will just have to pay and then get home and figure out how much I actually spent,” Zoraya Mago, a 60-year-old chef, said at a supermarket in eastern Caracas.

Under the devaluation plan, Maduro announced that 3,600 new bolívares would now equal one petro, a digital currency he created in February, which U.S. Treasury Department officials have called a scam. One petro equals the price of a barrel of oil, or about $60. So one dollar, under his plan, would equal about 60 new bolívares or 6 million old ones.

That represents a 90 percent devaluation from the previous official exchange rate. But that rate was accessible only by state entities. In effect, the devaluation is meant to bring the official exchange rate closer to its value on the black market.

 There were early signs that the plan had failed to stabilize the economy. Before Maduro’s announcement on Friday, for instance, a kilo of peaches — or 2.2 pounds — cost about 1.1 million bolívares. By Tuesday, prices had almost doubled, surging to 2.1 million old bolívares, or 21 new ones. The black market rate for the dollar on Friday was roughly between 7 million and 8 million bolívares — a figure that surged to about 14 million old bolívares, or 140 new ones, on Tuesday.

Victor Flores, 56, a manager at a carwash in a part of Caracas that was long an opposition stronghold, said he never considered taking part in the strike. 

“We don’t believe in the opposition anymore,” he said. “We’re living a terrible situation, and they have never been strong enough in their response.” 

The carwash, he said, would most likely have to dismiss employees to continue operating after the government-mandated salary hikes, which are scheduled to start in less than two weeks. 

“There’s too much confusion, and the way prices are rising is alarming,” he said. “We’re fearful of what’s coming for us.” 

The country’s main business group, Fedecamaras, did not take a position on the strike but has said Maduro’s new measures make no sense and would negatively impact already suffering businesses. 

Faiola reported from Miami.

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