Venezuela’s latest currency redenomination: Purely superficial?


Looking ahead, our panel of analysts expects inflationary pressures to ease notably this year and in 2022, but to remain excruciatingly high nonetheless. Moreover, without a concrete economic stabilization plan in place amid ongoing geopolitical tensions with the West, the Digital Bolívar is seen losing its value against the USD at a rapid pace.

Insights from Our Analyst Network

Commenting on the latest currency move, analysts at the EIU noted:

“Although the measure is ostensibly part of the BCV’s pivot to digitization, the authorities have confirmed that they will still continue to issue fiat money. In our view, the redenomination is largely cosmetic; although it will help to simplify bookkeeping for a while, it will not fundamentally engender confidence in the Bolivar, and large-scale debt monetization will continue to erode the value of the currency. Consequently, local adoption of the US dollar will continue apace.”

Moreover, reflecting on the current trend and short-term outlook for inflation, Alberto J. Rojas at Credit Suisse said:

“High inflation will likely persist, despite the government’s decision to remove six zeroes from the bolivar starting in October. We have long noted that Bolivar inflation no longer has the impact in real activity it had in the past. However, as a reference, we are revising our 2021 year-end annual headline inflation forecast to 915%, from a previous estimate of 1,950%; for year-end 2022, our inflation forecast is of about 800%. We think that a reduction in scarcity levels might be aiding in decelerating price pressures at the margin.”



Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.

Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest