Maduro orders a devaluation of 96 percent in the hyperinflation hit Venezuela

By Alexandra Ulmer and Corina Pons

CARACAS (Reuters) – Venezuelan President Nicolas Maduro announced Friday a single exchange rate for the petro cryptocurrency of his socialist government, which effectively fell by 96 percent with a move that economists said would lead to hyperinflation in the chaotic country.

In one of the biggest economic revisions of Maduro's five-year government, the former bus driver and union leader also said he would raise the minimum wage by more than 3,000 percent, raise the corporate tax rate and increase the heavily subsidized gas prices in the next weeks.

"I want the country to recover and I have the formula." Trust me, "Maduro said in a speech on the state television that was being broadcast at night.

But economists voiced doubts to the Venezuelan government with money-wasting, who faced US sanctions and has defaulted on its bondholders,

Venezuelans see their meager salaries eroded and companies will struggle with big increases in both taxes and minimum wages, they said.

"In the midst of this aggressive devaluation and monetary expansion due to salaries and bonuses, expect we have a much more aggressive stage of hyperinflation, especially in a context where eliminating excessive money imprints is not credible. worlds, "said the Venezuelan economist Asdrubal Oliveros of consultancy firm Ecoanalitica.

The International Monetary Fund predicted that inflation in Venezuela would be 1 million percent this year.

After ten years of oil bonanza, which is a consumption corridor in the OPEC member, many poor citizens are now reduced to searching waste to find food, while monthly wages are a few dollars a month.

Hundreds of thousands of Venezuelans have emigrated by bus through South America in one of the worst migration crises of the region

"World champions in economic disasters!" opposition leader Henrique Capriles tweeted after Maduro's announcement "No Venezuelan deserves to live this tragedy or these non-capable people destroy our nation!"

& # 39; PETROLIZING & # 39;

Maduro said that he has the disparate exchange rates and peg salaries, pensions and prices of Venezuela for the petro, a cryptocurrency, would be reviewed earlier this year by the government launched.

It was not immediately clear how the government wanted to implement the financial changes and the Ministry of Information did not respond to requests for details.

Cryptocurrency experts have expressed doubts about the petro as a functional financial instrument, referring to a lack of clear details on how it works and US sanctions outside of the limits.

President Donald Trump signed in March an executive order that blocked all US-based financial transactions relating to the petro, with officials warning that the Venezuelan cryptocurrency was a "scam".

The Venezuelan government has not given a clear subdivision of petro-investors or how much they have collected from the sale of the cryptocurrency.

Maduro argues that he is the victim of a Washington-led economic war & # 39; which is meant to sabotage its administration by means of sanctions and price breakouts. He has sworn that the petro will abolish the "tyranny" of the dollar and lead to an economic rebirth in Venezuela, home to the world's largest raw reserves.

Economists, however, point to Venezuela's strict currency controls, failed nationalizations and excessive money creation as the main causes of the economic crisis.

Maduro said Friday that a petro would be $ 60 and the equivalent of 360 million bolivars. This implies a new exchange rate of 6 million bolivars per dollar, largely on a par with much used exchange rates on the black market, which implies a devaluation of 96% compared to the current official DICOM rate of 248,832 bolivars per dollar.

"They've dollarized our prices, I'm settling salaries and prizes," Maduro said. "We will convert the petro into the reference that controls the movements of the entire economy."

Maduro added that the minimum wage would amount to "half a petro," which baffled some Venezuelans and caused the Twitter hashtag # Black Croway.

(Additional Reporting by Vivian Sequera and Brian Ellsworth, written by Alexander Ulmer, editing by Simon Cameron-Moore)

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