The bolívar fuerte (sign: Bs.F. or Bs.; plural: bolívares fuertes; ISO 4217 code: VEF) has been the currency of Venezuela since 1 January 2008. The word fuerte means strong, and the new currency replaced the original bolívar (sign: Bs.; plural: bolívares; ISO 4217 code: VEB) at the rate of Bs.F. 1 = Bs. 1,000 because of inflation.
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History
Bolívar
The bolívar is named after the hero of Latin American independence Simon Bolívar. The bolívar was adopted by the monetary law of 1879, replacing the short-lived venezolano at a rate of five bolívares to one venezolano. Initially, the bolívar was defined on the silver standard, equal to 4.5g fine silver, following the principles of the Latin Monetary Union. The monetary law of 1887 made the gold bolívar unlimited legal tender, and the gold standard came into full operation in 1910. Venezuela went off gold in 1930, and in 1934 the bolívar exchange rate was fixed in terms of the U.S. dollar at a rate of 3.914 bolívares = 1 U.S. dollar, revalued to 3.18 bolívares = 1 U.S. dollar in 1937, a rate which lasted until 1941. Until 18 February 1983 (now called Black Friday (Viernes Negro) by many Venezuelans), the bolívar had been the region's most stable and internationally accepted currency. It then fell prey to high devaluation. Exchange controls were imposed on February 5, 2003 to limit capital flight. The rate was pegged to the U.S. dollar at a fixed exchange rate of 1,600 VEB to the dollar.
Bolívar fuerte
The government announced on 7 March 2007 that the bolívar would be revalued at a ratio of 1 to 1,000 on 1 January 2008 and renamed the bolívar fuerte in an effort to facilitate the ease of transaction and accounting. The new name is literally translated as "strong bolívar" but also refers to an old coin called the peso fuerte worth 10 Spanish reales. The name "bolívar fuerte" is used to distinguish it from the older currency that was being used along with the bolívar fuerte. The official exchange rate is restricted to individuals by CADIVI, which imposes an annual limit on the amount available for travel.
Since the government of Hugo Chávez established strict currency controls in 2003, there have been a series of five currency devaluations, disrupting the economy. On 8 January 2010, the value was changed by the government from the fixed exchange rate of 2.15 bolívares fuertes to 2.60 bolívares for some imports (certain foods and healthcare goods) and 4.30 bolívares for other imports like cars, petrochemicals, and electronics. On 4 January 2011, the fixed exchange rate became 4.30 bolívares for 1.00 USD for both sides of the economy. On 13 February 2013 the bolívar fuerte was devalued to 6.30 bolívares per 1 USD in an attempt to counter budget deficits. On 18 February 2016, President Maduro used his newly granted economic powers to devalue the official exchange rate of the bolívar fuerte from 6.3 Bs.F per 1 USD to 10 Bs.F per 1 USD, which is a 37% depreciation against the U.S. dollar.
On January 26, 2018, the government retired the protected and subsidized fixed exchange rate that was highly overvalued as a result of rampant inflation.
On February 5, 2018, the Central Bank of Venezuela announced a 99.6% [sic] devaluation, with the exchange rate going from 10 Bs.F per USD to 25,000 Bs.F per USD. This made the bolívar fuerte the second-least valued circulating currency in the world based on that exchange rate, behind only the Iranian rial; it is the least valued circulating currency in the world based on the black market rate.
In official terms, the value of the currency has plummeted by nearly half since the first Dicom auction call results were announced. The official exchange rate stands at 49,477.50 VEF/USD, making it the least valued circulating currency in the world based on official exchange rates.
Currency black market
The black market (parallel) value of the bolívar fuerte has been significantly lower than the fixed exchange rate and other rates set by the Venezuelan government (SICAD, SIMADI, DICOM). In November 2013, it was almost 10 times lower than the official fixed exchange rate of 6.3 bolívares per U.S. dollar. In September 2014, the currency black market rate for the bolívar fuerte reached 100 VEF/USD; on 25 February 2015, it went over 200 VEF/USD. on 7 May 2015, it was over 275 VEF/USD and on 22 September 2015, it was over 730 VEF/USD. Venezuela still had the highest inflation rate in the world in July 2015. By 3 February 2016, this rate reached 1,000 VEF/USD. This rate surpassed 4,300 VEF/USD on 10 December 2016. It surpassed 10,000 VEF/USD on 28 July 2017, and on 7 September 2017, the rate surpassed 20,000 VEF/USD for the first time. Inflation accelerated, and on 1 December 2017, it reached 100,000 VEF/USD for the first time ever. The rate surpassed 200,000 VEF/USD on 18 January 2018.
According to DolarToday, the estimated exchange rate is 235,002.77 VEF/USD in Venezuela's free market as of 23 March 2018, which makes it the least valued circulating currency in the world. The 100,000 bolívares fuertes note is worth around 43 U.S. cents.
It is illegal to publish the "parallel exchange rate" in Venezuela. One website that publishes parallel exchange rates, since 2010, is DolarToday, which has also been critical of the Maduro government. Mercadolar is another website showing parallel exchange rates.
Bolívar soberano
On 22 March 2018, President Nicolás Maduro announced a new monetary reform, in which the bolívar would once again be revalued at a ratio of 1 to 1,000, making the new bolívar equal to one million pre-2008 bolívares. The currency was renamed as the bolívar soberano ("sovereign bolívar"). New coins in denominations of 50 céntimos and 1 bolívar soberano, and new banknotes in denominations of 2, 5, 10, 20, 50, 100, 200 and 500 bolívares soberanos were introduced. The change will be made effective from June 4, 2018,.
From May 1, 2018, all prices will need to be expressed in both bolívares and bolívares soberanos. From June 4, 2018, old bolívar denominations will be demonetised when the change in currency occurs. Venezuelan citizens will have to use or exchange their old denominations before their validity lapses on that date.
Bolivar Exchange Rate Black Market Video
Coins
Bolívar
In 1879, silver coins were introduced in denominations of 1/5, 1/2, 1, 2, and 5 bolívares, together with gold 20 bolívares. Gold 100 bolívares were also issued between 1886 and 1889. In 1894, silver 1/4 bolívar coins were introduced, followed by cupro-nickel 5 and 12 1/2 céntimos in 1896.
In 1912, production of gold coins ceased, whilst production of the 5 bolívares ended in 1936. In 1965, nickel replaced silver in the 25 and 50 céntimos, with the same happening to the 1 and 2 bolívares in 1967. In 1971, cupro-nickel 10 céntimo coins were issued, the 12 1/2 céntimos having last been issued in 1958. A nickel 5 bolívares was introduced in 1973. Clad steel (first copper, then nickel and cupro-nickel) was used for the 5 céntimos from 1974. Nickel clad steel was introduced for all denominations from 25 céntimos up to 5 bolívares in 1989.
In 1998, after a period of high inflation, a new coinage was introduced consisting of 10, 20, 50, 100 and 500 bolívar denominations.
The former coins were:
- 10 bolívares
- 20 bolívares
- 50 bolívares
- 100 bolívares
- 500 bolívares
- 1000 bolívares (minted 2005, issued late 2006, incorrectly rumored as recalled due to official Coat of Arms change during the interval)
All the coins had the same design. On the obverse the left profile of the Libertador Simón Bolívar is depicted, along with the inscription "Bolívar Libertador" within a heptagon, symbolizing the seven stars of the flag. On the reverse the coat of arms is depicted, circled by the official name of the country, with the date and the denomination below. In 2001, the reverse design was changed, putting the denomination of the coin at the right of the shield of the coat of arms, Semi-Circled by the official name of the country and the year of its emission below.
Bolívar fuerte
Coins are in denominations of 1, 5, 10, 12 1/2, 25, 50 céntimos, and 1 bolívar. They are rendered obsolete by high inflation. It will be noticed that there is a coin of 12 1/2 céntimos and a coin of 1 céntimo, but no coin of 1/2 céntimo. Therefore giving correct change for a purchase of (for example) 4 1/2 céntimos would require using a 12 1/2 céntimos coin and getting 8 céntimos back. In December 2016, it was announced that coins of 10, 50, and 100 bolívares would enter circulation soon.
Banknotes
Bolívar
In 1940, the Banco Central de Venezuela began issuing paper money, introducing by 1945 denominations of 10, 20, 50, 100 and 500 bolívares. 5 bolívar notes were issued between 1966 and 1974, when they were replaced by coins. In 1989, notes for 1, 2 and 5 bolívares were issued.
As inflation took hold, higher denominations of banknotes started being introduced: 1,000 bolívares in 1991, 2,000 and 5,000 bolívares in 1994, and 10,000, 20,000 and 50,000 bolívares in 1998. The first 20,000 banknotes were made in a green color similar to the one of the 2,000 banknotes, which caused confusion, and new banknotes were made in the new olive green color.
The following is a list of a former Venezuelan bolívar banknotes.
Bolívar fuerte
2007-2016 ("2008")
New banknotes of the series 2007-2015 with values of 2 to 100 BsF have been issued since 20 March 2007. The greater the values, the longer re-issuing occurred. Only the 100-BsF-note was re-issued in November 2015.
- 2 BsF: 2007-03-20 to 2013-10-29
- 5 BsF: 2007-03-20 to 2014-08-19
- 10 BsF: 2007-03-20 to 2014-08-19
- 20 BsF: 2007-03-20 to 2014-08-19
- 50 BsF: 2007-03-20 to 2015-06-23
- 100 BsF: 2007-03-20 to 2015-11-05
All values have the same rectangular format 156 × 69 mm, somewhat more lengthy than the earlier series.
The obverse side is portrait-oriented, the lower half carrying a portrait.
The reverse side is landscape-oriented, the left two thirds showing an animal in front of a habitat.
Re-issues retain the value-specific motifs, but the printing quality is different. The notes are printed by Casa de la Moneda Venezuela in Venezuela.
2016-17
High inflation, which was a part of Venezuela's Economic Collapse of 2016, caused the bolívar fuerte's value to plummet. The 2- and 5-bolívares fuertes notes were no longer found in circulation due to this inflation, but remain legal tender. By December 2016, the 100 bolívares fuertes note, Venezuela's largest denomination of currency, was only worth about $0.023 USD on the black market.
On 7 December 2016, a new series of banknotes (recolors of the previous notes) in denominations of 500, 1,000, 2,000, 5,000, 10,000, and 20,000 bolívares fuertes was unveiled to the Venezuelan public. Days later on 11 December, President Nicolás Maduro who had been ruling by decree wrote into law that the 100 Bs.F. would be pulled from circulation within 72 hours because "mafias" were allegedly storing those particular bills to drive inflation. With more than 6 billion 100 Bs.F. notes issued consisting of 46% of Venezuela's issued currency, Maduro enacted an exchange for Venezuelan citizens to transfer all 100 Bs.F. notes for 100 Bs.F. coins while also blocking international travel to prevent the return of the bolívares that were supposedly stockpiled. The government justified the move claiming that the United States was working with crime syndicates to spirit away Venezuela's paper money to warehouses in Europe to cause the fall of the government. The government was thwarting this threat by withdrawing the notes from circulation. On 14 February 2017, Paraguayan authorities uncovered a 30 metric ton stash of 50 and 100 bolívares fuertes totaling 1.5 billion Bs.F on its Brazilian border that had not yet been circulated. According to a United States Department of Defense adviser linked to The Pentagon, the 1.5 billion Bs.F was printed by Venezuela and destined for Bolivia, since unlike the implied exchange rate of thousands of bolívares fuertes equaling one United States dollar, the exchange rate was approximately 10 bolívares fuertes per dollar, making the value of the stash 419 times stronger from US$358,000 to US$150 million. The Pentagon adviser further stated that the Venezuelan government tried to send the newly printed notes to be exchanged by the Bolivian government so Bolivia could pay 20% of its debt to Venezuela, and so Venezuela could use the US dollars for its own disposal.
By February 2017, the deadline for exchanging the 100 bolívares fuertes note had been delayed multiple times. After several extensions, these banknotes are expected remain in circulation indefinitely. The circulation and validity of these notes were extended to 20 March 2018 by virtue of Decreto N° 3249.
On November 3, 2017, the Banco Central de Venezuela issued a 100,000 bolívares fuertes note which is similar to the 100 bolívares fuertes note of the 2007 series, but with the denomination spelled out in full instead of adding an additional three zeroes to the number 100. This denomination was worth $2.42 using the unofficial exchange rate at the date of its release. Since then, it has lost over 80% of its value.
Source of the article : Wikipedia
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