Oil-rich Venezuela finally devalues currency, raises petrol price 6000%

President Nicolas Maduro of Venezuela finally announced the devaluation of his country’s currency, bolivar by 59 percent, raising petrol prices by 6000 percent – meaning paying about 60 times more.

Making Venezuela’s biggest economic announcement on Tuesday, Maduro said the time has come for placing a fair price on hydrocarbons.

“This is a necessary action, for which I take responsibility,” Maduro said in a nationwide address

“The time has come to establish a system that guarantees access to hydrocarbons at a fair price but that also guarantees the funding of investment in producing that gasoline.”

Before the address, a litre of petrol in the oil rich country went for 1.5 US cents (N3), but would now go for 95 US cents (N190) per litre.

This is the country’s first increase in fuel price in 20 years.

The official exchange rate used for food and medicine imports will weaken to 10 bolivars per dollar from 6.3, as of Thursday, while a second rate will be allowed to float – affirming the country’s dual exchange rate system.

According to the World Economic Forum (WEF), Venezuela has long lived in denial keeping its official currency at a point, while the parallel market rate plunges – just like in Nigeria.

The country’s currency has fallen by 93 percent between 2014 and 2016, with WEF saying “Venezuela’s government has tried to deny economic reality with price and currency controls. The idea was that it could stop inflation”.

Inflation was however not curbed as the country recorded a 140 percent rise in inflation rates in 2015 alone.

In his announcement, Maduro however increased the country’s minimum wage by 20 percent, adding that he hoped the new policies “will be understood by the people on the streets”, calling against looming protests.

The policies have already been rejected by the opposition, with Henrique Capriles, two-time opposition presidential candidate, saying it is time for a possible referendum on recalling Maduro.

“The constitutional time has come … let’s go for recall,” he said in a tweet after Maduros’ speech.