Wednesday, June 26, 2019 | Updated at 4:21 AM ET


The Economic Crisis in Venezuela Forces President Maduro to Devalue Currency

First Posted: Jun 02, 2017 05:10 AM EDT

Venezuela's currency is called bolivar, and because of the economic crisis that is generating a series of protests against President Maduro, the government has devalued the bolivar by 64.13%.

On Wednesday, Pedro Maldonado, the central bank director (BCV), announced the results of the first auction in the new currency platform, now called Dicom. It sold one US dollar for 2,010 bolivars, a dramatic drop from the previous rate of about 728 bolivares.

"This is very satisfying to us because it is an example of economic recovery within the framework of the Bolivarian economic agenda," Maldonado told Bloomberg news.

Those that oppose Maduro believe that he is trying everything to save himself from the pressures of protesters demanding his exit from power as a solution to the spiraling humanitarian crisis in Venezuela.

According to the US-based Energy Information Administration, in 2013 Venezuela's proven barrel reserves was 297.6 billion barrels, which makes this South American country the largest oil reserve on the planet - surpassing Saudi Arabia.

The falling of crude oil prices is causing the currency drought that Venezuela faces. The unfortunate economic circumstance has triggered a severe shortage of everything from food, toiletries, car parts, and medicine.

Companies that participated in the auction determined the new Dicom rate. However, the government still maintains control of another rate, a preferential currency called Dipro at 10 bolivares per dollar. The Dipro is reserved for the import of food and medicine only. The Dicom rate is used for other import operations, which influences prices.

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