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Venezuela to Issue Banknotes in Higher Denominations

Started by Bimat, August 27, 2015, 04:46:58 PM

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Bimat

Venezuela is adding zeroes to its banknotes to deal with hyperinflation

Aug 27 2015 at 6:20 AM
Updated Aug 27 2015 at 4:08 PM

Venezuela is preparing to issue bank notes in higher denominations next year as rampant inflation reduces the value of a 100-bolivar bill to just 14 US cents on the black market.

The new notes -- of 500 and possibly 1,000 bolivars -- are expected to be released sometime after congressional elections are held on December 6, said a senior government official who isn't authorised to talk about the plans publicly.

Many Venezuelans have to carry wads of cash in bags instead of wallets as soaring inflation and a declining currency increase the number of bills needed for everyday purchases. The situation is set to get worse. Inflation, already the fastest in the world, could end the year at 150 per cent, said the official.

The government stopped releasing regular economic statistics in December, when it reported inflation had reached 69 percent.

A customer would need at least 1,280 bank notes to purchase a 24-inch Samsung television on sale at a mall in eastern Caracas for 128,000 bolivars. Some banks, meanwhile, have reduced daily withdrawal limits at ATMs because of shortages of the highest denominated notes.

The country is not planning to change it's three-tiered exchange rate system in the short term, said the official, adding that the government is working on plans to increase dollar revenue by developing mining and petrochemical projects and reduce its dependence on oil.

One US dollar is currently worth 725 bolivars on the black market, which Venezuelans use when they can't get government approval to purchase foreign currency at the three official exchange rates of 6.3, 12.8 and 200.

Venezuela's monthly minimum wage of 7,422 bolivars equates to about $US37 at the weakest legal exchange rate and is only $US10 at the black market rate.

A unified exchange rate would not be possible until the economy becomes more diversified and domestic production rises, said the official.

Press officials at the central bank and finance ministry declined to comment when contacted by telephone Wednesday.

The black market rate is being manipulated by traders in Cucuta, Colombia and the Miami-based website dolartoday.com, the official added. While the rate has become a reference for some minor sectors of the economy, it's a small market and not representative of the overall economy, the official said.

Venezuela maintains its willingness to pay foreign debt and is buying back bonds when it can, said the official, adding that the government could consider selling or swapping gold reserves if it needed to. Gold currently held in Caracas could easily be transported abroad if the need arose, the official said.

The country's foreign reserves fell to a 12-year low of $US15.4 billion on July 27 and have since rebounded to about $US16.5 billion, according to data compiled by Bloomberg.

New loans from China will slowly be reflected in the country's reserves, the official said.

Source: Financial Review
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Bimat

According to this article in the The Wall Street Journal, central bank of Venezuela has awarded the contract to print higher denomination banknotes to Boston based Crane Currency.

(The full story is available only after subscription).

Aditya
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Bimat

Venezuelan Inflation Hits Currency With Arrival of Bigger Bills

December 1, 2016, 1:06 am
Updated on: December 1, 2016, 6:46 pm

(Bloomberg) -- After years of soaring prices reduced the value of the largest 100-bolivar bill to just a few U.S. cents, Venezuelan authorities are finally preparing to issue larger-denomination bank notes, much to the relief of shoppers.

The notes-500 and 5,000 bolivars will be released toward the middle of next month, said a senior government official who isn't authorized to talk about the plans publicly. Additional bills of 1,000, 2,000, 10,000 and 20,000 bolivars will enter circulation in the first half, the official said.

The refusal of the authorities to issue bigger bills had forced Venezuelans to ditch wallets in favor of bags of cash for everyday transactions. Things have got so bad that some shopkeepers weigh wads of bank notes instead of counting them to save time.

Inflation will probably end the year at 368 percent, according to the median estimate of 14 analysts who responded to a Bloomberg survey. While it will accelerate further next year, it won't reach four digits, said the official.

Venezuela's money supply has risen 130 percent over the past year, according to the latest data available from the Central Bank in Caracas and compiled by Bloomberg. On the black market, where a dollar costs more than six times as much as the weakest legal rate of 662 bolivars per dollar, the currency has slumped 65 percent this month alone.

To read about Venezuela's collapsing currency, click here.

The new bills will have a similar design to the notes currently in circulation but will have different colors, the official said.

Dollar-Only Resorts

International reserves hovering near a 14-year low of around $10.9 billion probably won't fall much further, the official said, declining to specify the current composition.

The weakening of the currency, rising inflation and declines in real purchasing power will not likely stop until the government sees more dollars flowing into the economy through higher oil prices or other economic activities, the official said. While crude exports account for about 95 percent of the country's foreign currency earnings, the government eventually wants to bring that rate down to 40 percent by developing mining, tourism, and agricultural exports, according to the official.

The government will use a new currency law signed by President Nicolas Maduro on Monday to allow for the increased the use of U.S. dollars in the tourism sector, the official said, adding that duty free stores at airports would begin to price and sell products in dollars to both traveling Venezuelans and foreign visitors.

The government is also planning to designate and develop certain tourist areas, including Margarita Island's Macanao Peninsula and nearby La Tortuga island, as dollar-only resort zones where visitors of any nationality -- including Venezuelans -- will pay for goods and services in dollars, the official said. Most tourist areas that Venezuelans currently frequent, including the Los Roques archipelago, will continue to price goods and services in bolivars, although dollars will be accepted, the official added.

Source: Bloomberg
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Jostein

#3
Bs100.000 added (apr. $5) ... ::)

The design is identical to Bs100 but adding the word "MIL" to word "CIEN". Colour yellow.

http://www.bcv.org.ve/c3/ampliacion/pdf/nuevadiagramacioncien.pdf
"Change is the law of life. And those who look only to the past or present are certain to miss the future" - John F. Kennedy

http://www.bimetallic-coins.com

augsburger

#4
Quote from: Jostein on November 07, 2017, 10:44:25 AMBs100.000 added (apr. $5) ... ::)

The design is identical to Bs100 but adding the word "MIL" to word "CIEN". Colour yellow.

http://www.bcv.org.ve/c3/ampliacion/pdf/nuevadiagramacioncien.pdf

I laughed when I saw it. They have 100 written as if it's still 100 and then "cien mil" written underneath it. Maduro is that typical guy who will play politics until the cows come home, pretending he's doing a good job by forcing people to believe nothing's wrong, when everyone can see it.

Bimat

De La Rue takes £18m hit as Venezuela fails to pay its bill

Philip Georgiadis

De La Rue has taken an £18m hit after the Venezuelan central bank failed to pay its bills, helping to send shares in the banknote printer tumbling as the company also announced the departure of its chief executive and warned on the outlook for profits.

Venezuela, which is facing economic meltdown and saw inflation hit 130,000 per cent last year, had previously been a "very good" customer, said Martin Sutherland, chief executive, until US sanctions against the South American country made it harder for the central bank to transfer money.

"We are in constant contact with the customer, they really do want to pay that debt," said Helen Willis, chief financial officer.

The Venezuelan charge was another blow to shareholders who were alarmed on Thursday after the company warned that profits for 2020 would be "somewhat lower" than this year. Analysts at Edison said the darkening picture for earnings was down to "increasing competition in the banknote market impacting margins".

De La Rue manufactures about a third of the world's banknotes and employs more than 2,500 people worldwide. Shares in the UK company dropped 29 per cent to the lowest level in 15 years in early afternoon trading on Thursday.

Mr Sutherland, who has run the company since 2014, agreed with the board that he will step down but remain in place as a successor is sought.

De La Rue, which first printed bank notes in Mauritius in 1860, is also grappling with the fallout from losing a £260m contract last year to print the UK's new blue passports after Brexit to French company Gemalto. The company had tried to appeal against the Home Office's decision, and was backed by pro-Brexit MPs, the opposition Labour party and a petition organised by the Daily Mail newspaper that gathered 330,000 signatures. But within a fortnight the company gave up, writing off £4m in bid costs.

The group laid out a fresh three-year £20m cost-reduction programme on Thursday, as it adapts its business following the British passport contract.

Mr Sutherland insisted that the furore around the loss of the contract was "water under the bridge", and that having reshaped the business over the past five years, "I think I have achieved a lot of what it was I was brought into do".

The group, which has sold off its struggling paper business and is already conducting a strategic review of its passport business, reported a 12 per cent year-on-year rise in revenue to £516.6m in the 12 months to the end of March, while adjusted operating profit rose 6 per cent to £60.1m.

Its operating model will be reorganised into two divisions: authentication, which includes security features and identification, and currency, its banknote printing business.

Source: Financial Times
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Bimat

New Venezuelan banknotes greeted with skepticism

Date: 6/15/2019 7:56:04 AM

(MENAFN - The Peninsula) Associated Press

CARACAS, Venezuela: Some Venezuelans are expressing skepticism about new banknotes that the government says will ease challenges posed by the country's soaring inflation.

Bolivar bills with larger denominations are supposed to start circulating Thursday, though there was no sign of them at some banks in the Venezuelan capital in Caracas.

The central bank says the bills of 10,000, 20,000 and 50,000 bolivares will help make payments and transactions "more efficient." The biggest new bill is worth about $8.

But Caracas resident Rafael Gerardi says the measure will make it hard to get change.

"It's not logical," he said.

Venezuela's currency has such little value that people commonly use debit cards to avoid hauling large piles of already scarce cash to pay for basic goods.

Source: Menafn
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Bimat

Sources: Venezuela Central Bank to Issue New Banknotes

CARACAS – For quite some time, the administration of leftist incumbent Nicolás Maduro has kept the inorganic money factory running because of the rampant inflation wreaking havoc in Venezuela's economy. The highest denomination banknote since 2018 – the year of the second and most recent reconversion process when five zeroes were knocked off the currency – has been Bs.100,000 that today equals much less than a penny as coins have ceased to exist.

These banknotes – useless or not – are hard to get, because most of the time are unavailable in banks nationwide and citizens have to turn to money transfers or any other transactions offered by the online banking range of services.

That being said, unnamed sources told Bloomberg on Monday that the Central Bank of Venezuela (BCV) is mulling over the issuing of a set of new banknotes starting with one of Bs.100,000 that would become the highest denominated of them all, even though that amount equals only 22 cents today.

So far this year, Venezuela has bought around 71 tons of paper money from Italy-based Fedrigoni, a company owned by investment firm Bain Capital, according to compiled data by Bloomberg from business intelligence provider Import Genius.

The shipments with paper money come from Brazil, although this will be Fedrigoni's last because its contract with the BCV signed in 2018 already expired, one year before the issuing company was sanctioned by the US.

A few months ago, the government of Maduro turned to Russian joint-stock company Goznak to buy 300 million banknotes in pieces ranging from Bs.10,000 to Bs.50,000 after contracting a debt with De La Rue, one of the world's largest banknotes manufacturer.

Despite this purchase, banknotes between Bs.10,000 and Bs.50,000 are a minority in the total of pieces circulating in Venezuela. Only 1% are Bs.10,000 banknotes, while 1.9% are Bs,20,000 and 2% Bs.50,000 giving 95.1% of circulating money a value less than the Bs.500 banknote (0.0011 cents if calculated at today's exchange rate and about $8 by the time it was first issued in 2017).

Since the Bs.500 lost its value, the BCV decided to issue three new pieces in June 2019: Bs.10,000, Bs.20,000, and Bs.50,000. The latter also had a value of about $8 according to the BCV exchange rate back then.

Ever since this highest denominated banknote has devalued by 97.5%, so much so that no one in Venezuela can buy the cheapest product from the basic food basket (sardines) since its price until August of this year was Bs.153,733, so unless the economic team of Maduro comes up with a reasonably good plan to revalue the currency this alleged new issuance will do more harm than good to the pockets of Venezuelans once more.

Source: Latin American Herald Tribune
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.