Cash chaos in Venezuela after banknote withdrawn

Government fails to deliver replacement note on time, resulting in long queues and chaos in the country.

Venezuelans lined up to deposit 100-unit banknotes before they turned worthless, but replacement bills had yet to arrive, increasing the cash chaos in the country with the world’s highest inflation.

On Thursday, President Nicolas Maduro said new higher-denomination bills were ready, but they were still nowhere to be seen on the streets.

The country became absent of any viable paper currency on Friday after the government failed to deliver on the promise of introducing a new 500-bolivar bill and higher denominations.

Shopkeepers put up signs saying 100-bolivar bills would no longer be accepted. That meant many people looking to buy groceries or take taxis were out of luck, as banks had run out of lower-denomination bills such as 50 and 20-bolivar notes during the week. 

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In the capital, Caracas, people had to rely on credit cards and bank transfers, or avoided making purchases altogether.

On Sunday, Maduro made a surprise announcement that the 100-bolivar note, which is worth little more than two US cents, would go out of circulation.

He held up a new 500-bolivar bill on his television show on Thursday, promising that the new banknotes would soon be in wide circulation and offering to temporarily cut sales tax for credit card transactions.

But on Friday, ATMs were still issuing only the now-worthless 100-bolivar notes.

Maria Silva, a resident of Caracas, told Al Jazeera she was disappointed after waiting in long queues to exchange her 100-bolivar bills.

“We are told we need to drop off the hundred bolivar bills and get them exchanged. But we come to withdraw new cash, and we get the hundred again. I don’t understand. It is crazy. I do not understand,” she said.

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Welfare groups are reporting an increase in families struggling to survive because of the rampant inflation. Some are even handing over their children to friends or the state to look after. Food riots and looting are becoming more common as the situation deteriorates.

On Friday, people looted delivery trucks and clashed with police as protests broke out in anger at chaotic efforts to change the country’s banknotes, officials and locals said.

In the eastern city of Puerto la Cruz, “people rioted because they wanted to take out money and they weren’t allowed to”, a local baker told the AFP news agency.

“The police fired in the air to calm the riot. Everyone dispersed and the police ordered all shops to be closed,” said Genesis, who asked not to be identified by her surname for fear of reprisals.

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In the eastern city of Maturin, dozens of people blocked off a major avenue in protest and looting broke out.

In November, Indian Prime Minister Narendra Modi announced a sudden withdrawal of 500 and 1,000-rupee banknotes from circulation, causing chaos in the country.

The decision, according to Modi, was taken in order “to break the grip of corruption and black money”.

Meanwhile, amid Venezuela’s currency chaos, the US cautioned its citizens against visiting the economically deteriorating South American country.

“Political rallies and demonstrations occur with little notice, and are expected to occur with greater frequency in the coming months,” the State Department said in a travel warning.

“If security climate worsens, US citizens should note they’re responsible for arranging their own travel out of Venezuela.”

Venezuela’s border with Colombia and Brazil was closed temporarily and on Thursday night, the closure was extended by another 72 hours.

Maduro said says the closure was needed to thwart “mafias” who hoard bolivars. Critics mocked the notion that gangsters would choose to keep their wealth in the world’s fastest-devaluing currency. 

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Source: Al Jazeera, News Agencies