The weakening economy of Venezuela under the regime of President Nicolas Maduro is forecast by the International Monetary Fund to reach a consumer-price inflation rate of 480 percent by the end of this year, and peak at 1,640 percent in 2017.
Venezuela’s growing financial crisis and economic collapse also pressured the government to announce a state of “economic emergency,” which immediately gave the Venezuelan government full control over the goods, assets, properties and food of private companies.
The state of “economic emergency,” which was extended for another 60 days by Maduro on July 13, basically requires every company registered under the Venezuelan regulatory framework — both private and public companies — to give up their capital to the government to settle its outstanding financial debt.
The rapidly growing inflation rate and fears of forceful seizure of company assets by the government have driven a surge in demand for foreign currencies, including U.S. dollars, that can be transported out of the country and protected from seizure by the Venezuelan government.
According to various reports , the black market rate for U.S. dollars has increased to 1,000 Venezuelan bolivars per dollar, which is 100 times higher than the official government rate of 9.95 bolivar per dollar. The Venezuelan black market data displays a staggering 82 percent decrease in the value of the national currency in a span of 12 months.
Since mid-2015, the U.S. dollar and other international currencies including Bitcoin have been perceived as ideal alternatives to the bolivar for both businesses and individuals because of the high international value of these two currencies.
The U.S. dollar, which leads the world’s M1 money supply rankings , possesses the highest international exchange and conversion rate among all national currencies. Bitcoin, a digital currency based on a decentralized network of computers, offers its users ideal international conversion rates […]
