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Can "New" Currency Abate Venezuelan Inflation? : Ibsen Martinez
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The most visible of these is Zimbabwe's recent currency 'revaluation.' The revaluation wiped three zeroes off the $ 20.000 Zimbabwean bill into a $20 bill. The local currency had been rendered almost worthless by years of inflation that hit 1,200 percent a year. Zimbabweans had to carry large satchels full of banknotes to pay for even the most ordinary trifle. The $20 bill actual value after the redenomination—10 American cents at official rates, less than 3 cents at black-market rates—remained unchanged. So has hyperinflation.


BCV's independence and monetary transparency shows now at least three major areas of concern. First is the continuation of foreign exchange government controls that have been going on for four years now. Stiff exchange controls not only undermine BCV's capacity to implement monetary policy; they have boosted black market and corruption. Venezuelan private companies have only controlled access to U.S. dollars while individuals have access to foreign currency only on a limited yearly quota basis.