The Venezuelan bolivar depreciated rapidly in July, losing in just four weeks more than 35% of its value against the U.S. dollar, according to the price recorded on Tuesday in the country's parallel market.
The currency, which was relaunched a year ago by the Nicolas Maduro regime with an exchange rate of 60 bolivars per dollar, was quoted on Tuesday at 12,231 bolivars on the black market, an accelerated increase compared to the 7,846.31 bolivars per dollar on July 1.
The Venezuelan black market is the only one to which the vast majority of Venezuelans have access and is the main reference point in the history of consumer product prices.
Economists said the variation in the exchange rate in July is due to the accelerated pace of inflation in Venezuela, which this year should be around 1 million percent, according to the latest forecast of the International Monetary Fund.
When you have an economy that suffers from such an inflation rate, the evolution of the exchange rate reaches a point where "it is an almost completely vertical line, a straight line up," said Venezuelan economist Alexander Guerrero.
The inflation forecast of 1 million% for this year actually reflects a small improvement. The IMF had predicted at the beginning of the year that the 2019 rate would be close to 10 million, and then substantially revised its forecast down this week, citing some improvements in the monetary policy of the nation's central bank.
But an inflation rate of 1 million% is no cause for celebration.
"For the Venezuelan consumer, 1 million, 10 million makes no difference. When you reach the levels of inflation that Venezuela has, the rate ceases to be important. You can't buy anything at the supermarket anyway," Guerrero said.
The Venezuelan worker, whether public or private employee, is affected the worst, because wages are not rising quickly enough to survive in an economy that has been informally "dollarized," where product prices tend to rise to be on par with the dollar.
The Venezuelan minimum wage of 60,000 bolivars per month currently equals less than $5, or 16 cents a day. A cup of coffee is sold on the street for around 7,000 bolivars.
According to Oscar Meza, director of the Center for Documentation and Social Analysis of the Venezuelan Federation of Teachers, the basic monthly food basket (containing basic food products for a family of five people), currently requires $328.19 (just over 4 million bolivars) or the equivalent of 67 minimum wages.
The purchasing power of wages has been "destroyed by hyperinflation," Meza said. "The minimum wage in Venezuela is four times lower than in Cuba."
According to the latest surveys conducted in the country, only 12% of Venezuelans eat three times a day due to inflation and acute shortages.
The serious social crisis that the country is undergoing has led more than 4 million Venezuelans to flee the once prosperous oil nation. And the spiked inflation rate comes at a time when Venezuela is experiencing the worst economic crisis in its history, which has been ongoing since Maduro assumed the presidency in 2013.
The accumulated contraction of the gross domestic product in the Maduro years will reach 65% this year, said Alejandro Werner, the Western Hemisphere director of the IMF, this week. He described the Venezuelan situation as an unprecedented historical case in the region.
For 2019, the IMF predicted an economic contraction of 35%, which will exceed the 25% drop recorded the previous year, due to the drastic reduction in oil production.
