Venezuelan Inflation Soars to 26 Million Percent

The Venezuelan Bolivar has just experienced its most devastating and destructive short-term decline in history! On October 24th, the cost of USD$1 in Venezuela was Bs. 1,221.87, but the announcement of a 40% minimum wage hike along with rumors swirling that the Venezuelan central bank has solicited bids for the printing of new higher denomination notes of 500, 1,000, 2,000, 5,000, 10,000 and 20,000 bolivars (the highest today is 100 bolivars) – has caused the cost of USD$1 in Venezuela to explode to Bs. 4,538.46.

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Over the past month, the Venezuelan Bolivar has lost a stunning -64.64% of its purchasing power against the U.S. dollar, its largest month-to-month decline in history. For comparison, its median month-to-month decline over the past 5 years has been only -5.95%.

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Over the past quarter, the Venezuelan Bolivar has lost a stunning -77.46% of its purchasing power against the U.S. dollar, its largest quarter-to-quarter decline in history. For comparison, its median quarter-to-quarter decline over the past 5 years has been only -20.93%.

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On a year-over-year basis, the Venezuelan Bolivar has lost -80.44% of its purchasing power against the U.S. dollar and is rapidly approaching its record year-over-year decline set in mid-2015 of -89.09%. For comparison, its median year-over-year decline over the past 5 years has been only -61.18%.

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Based on the current year-over-year decline in the Venezuelan Bolivar of -80.44%, NIA calculates that Venezuela has an implied price inflation rate of 411.38%, which is up from an October 5th low of only 31.04% and is rapidly approaching the record high set in mid-2015 of 815.65%!

venezuelaimpliedpriceinflationrate

Based on the current quarter-to-quarter decline in the Venezuelan Bolivar of -77.46%, NIA calculates that Venezuela has an implied price inflation rate of 38,641% – a new record high! (If the Venezuelan Bolivar continues to decline at a rate of -77.46% per quarter for the next 3 quarters, it will be down -99.74% on a year-over-year basis – causing Venezuela to have a year-over-year based implied price inflation rate of 38,641%.)

venezuelaimpliedpriceinflationrate2Based on the current month-to-month decline in the Venezuelan Bolivar of -64.64%, NIA calculates that Venezuela has an implied price inflation rate of 26,168,845% – a new record high! (If the Venezuelan Bolivar continues to decline at a rate of -64.64% per month for the next 11 months, it will be down -99.9996% on a year-over-year basis – causing Venezuela to have a year-over-year based implied price inflation rate of 26,168,845%.)

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The Venezuelan (Caracas) Stock Exchange Index in 2016 is both the world’s #1 best performing stock market and the world’s #1 worst performing stock market – depending on what currency you value it in. When priced in local currency, the Caracas Stock Exchange Index has made a year-to-date gain of 127.6%. When priced in U.S. dollars, the Caracas Stock Exchange Index has made a year-to-date decline of -58.2%.

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