Venezuela has devalued its currency from 4.3 to 6.3 bolivar per US dollar. This helps the government and exporters make more money on things they sell to other countries. However, imports become more expensive. Venezuela has devalued its currency a few times in the last decade. The last devaluation was in 2010.
Various countries around the world use different currencies. For example, the currency used in the United States is the US dollar, the currency used in Germany is the euro, and the currency used in Venezuela is the bolivar fuerte. If you live in Venezuela and want to buy a camera from the United States, the money you have is bolivar, but the money the camera is sold in is the US dollar. This is where the exchange rate comes in. Let’s say the cost of the camera is US$100. With the earlier exchange rate, the cost of the camera in Venezuelan currency would be 430 bolivar, but with the new rate, it would be 630 bolivar. So the camera is now more expensive to somebody living in Venezuela. Let us reverse the situation. You live in Venezuela and are selling toys in the United States for US$10 each. You were making 43 bolivar per toy before, but you will now make 63 bolivar – that’s a lot more money.
Venezuela is one of the world’s largest oil exporters. With the new exchange rate, the government of Venezuela will make more money in bolivars when it sells oil to other countries. However, the products that are imported into Venezuela will now cost more. Venezuelans import many products that they use everyday such as food, medicines, electronic gadgets, and clothes. This devaluation in the currency is difficult for Venezuelans who will now spend more money buying these basic products. As it is, Venezuela has a shortage of goods such as sugar, flour, and more everyday products.
Venezuela was ruled by the Spanish for almost 300 years. Simón Bolívar, a political leader born in Caracas, the capital of Venezuela, helped several South American countries get their independence from Spain. Venezuela got its independence in 1811. Bolivar is considered a national hero and the Venezuelan currency, the bolivar fuerte, is named after him.
According to the magazine The Economist, in January, the cost of a Big Mac at McDonald’s in Venezuela was 39 bolivar (US$9.08), one of the most expensive Big Macs in the world. Since 1986, The Economist has been publishing the cost of Big Macs in a few countries. Here is the Big Mac index for January 2013.