Venezuela will slash six zeroes off its inflation-battered currency, the bolívar, to make it easier to use, the Central Bank said on Thursday.
The change will take effect on October 1 with the issuance of new currency notes, called the digital bolívar.
"All monetary amounts expressed in national currency will be divided by one million," the Central Bank of President Nicolás Maduro's beleaguered leftist government said.
It said the goal of the change is to "facilitate" the use of the bolívar.
It is the third time in 13 years that Venezuela – suffering the worst economic crisis in its modern era – has used such a measure.
In August 2018, the government lopped five zeroes off its bank notes, having taken off three in 2008. In 2018, the government replaced the ironically named strong bolívar with the sovereign bolívar.
The once-wealthy oil producer is enduring its fourth year of hyperinflation and its eighth year of recession. From January through to May prices rose 265 percent. Inflation was almost 3,000 percent in 2020 and more than 9,500 percent the year before, according to Central Bank figures.
"It was an expected decision," economist Cesar Aristimuno, director of Aristimuno Herrera & Associates, told AFP. "By itself it was necessary ... the billing and accounting processes for companies were already practically impossible."
People had even resorted to using a shorthand for prices, saying "thousands" instead of "millions."
There is such a shortage of bolívares that long queues are a regular sight outside banks.
Transactions made in the local currency are usually done by card payment or bank transfer rather than in cash.
Inflation is so bad that the everyday economy now works mainly in dollars, with many stores listing prices in the US currency.
Back in May the government tripled the minimum monthly wage but the new amount was still not even enough to buy a kilogramme of meat.
However, Aristimuno warned that while "convenient" this measure will not transform Venezuela's battered economy.
"We cannot hope for economic miracles from this decision, taking into account that ... it comes without any underlying economic announcements" that could reduce inflation or boost GDP.
The Maduro government is under international sanctions championed by the United States, which is pushing for his ouster and does not recognise him as the country's legitimate president.
With the currency overhaul, the Central Bank will issue new notes with face values of five, 10, 20, 50 and 100 bolívars and a one-bolívar coin, Communications Minister Freddy Náñez said on Twitter.
by Andrea Tosta, AFP