The money of Venezuela is becoming useless, and its cash crisis is getting worse.
The nation is spiraling farther into a humanitarian catastrophe spurred by the government's economic policies, which have caused the currency, the bolivar, to plunge in prices and value to skyrocket. Food and medication shortages have been reported across Venezuela.
The bolivar has lost 96 percent of its value this season. As of Tuesday, it took 84,000 bolivars to buy an American buck. At the start of this month, a dollar was worth 41,000 bolivars. And at the start of this season, it just required 3,100 bolivars to buy a dollar, according to DolarToday, a website that monitors the exchange rate.
Millions of Venezuelans look at DolarToday or a different site, Paralelo Venezuela, to discover how much money they should purchase groceries -- if there's food on the shelves at all. The official exchange rate of the government has been deemed meaningless.
Interest in Venezuela has soared to 4,115 percent in comparison to a year ago, based on Steve Hanke, a professor of applied economics at Johns Hopkins University, who's an expert on hyperinflation. The crisis has deepened because the authorities relied on some of its debts.
"The economy is really in a complete death spiral," says Hanke. "It's gotten a lot worse there in the last two weeks."
Other estimates are lower than Hanke's but exorbitant by the standards of any country. The research firm Ecoanalitica estimates that costs spiked compared with a year ago. Prices at hotels and restaurants have been up 70% in the month earlier in October.
Soaring prices force Venezuelans to wait for hours in line at the supermarket, the ATM or possibly, just to get by. And things can get worse shortly.
The government and its state-run petroleum service, PDVSA, lately relied on some debts. Investors can organize and grab the only valuable asset -- oil -- in the USA of Venezuela if more defaults follow. This would choke off the government's primary source of cash, which it needs to import food and medicine.
President Nicolas Maduro, whom the Trump government labels a dictator, demanded earlier this month that the nation's debt is restructured. The authorities and PDVSA owe over $60 billion. The central bank has less than $10 billion in reserves, which have dwindled during the last few years as trades have been paid by the country.
The nation's obligations extend much beyond debts to bondholders. In total, Venezuela owes $141 billion to bondholders, Russia, China, builders and petroleum service providers, based on an analysis by Moody's Investor Service.