Venezuela’s currency: worth more as craft paper than as currency | Business and Economy

Santa Marta, Colombia – Along the cobbled streets of the coastal city of Santa Marta, demand for bolivares from Venezuela is skyrocketing, but not for the monetary value of the tickets.

Instead of using his homeland’s money to pay for basic necessities in his homeland, Venezuelan immigrant Hector Cordero weaves change into wallets and handbags, which he sells to tourists in Colombia. Its artistic craftsmanship highlights the creative methods Venezuelans use to extract value from a currency that, amid soaring inflation, is considered by many to be worthless.

“These soberano bolivares are worthless,” Cordero, from Caracas, told Al Jazeera. “The notes I use have not been circulating since last year.”

Cordero uses around 70 banknotes of 100 bolivares each to make a small wallet by hand, or 100 banknotes to make a larger wallet. A purse may require up to 1,200 bills to produce. In total, the artist incorporates 16 different denominations of Venezuelan currency in his crafts, many of which are the abandoned soberanos bolivares.

Cordero sells wallets made from hundreds or even thousands of now worthless currency notes for around $ 8; handbags cost around $ 12. He says most of his clients are European and North American tourists – people who want to take home a piece of what was once one of South America’s strongest economies.

He learned his technique by watching others on the streets of Caracas and studying dozens of YouTube tutorials uploaded by other Venezuelans to teach people how to do what has become Venezolano origami.

“When I run out of bolivares, my brother goes to Venezuela and brings more notes,” Cordero said. “People have a lot of these tickets and we buy them. We give them what they ask for. He explained that Venezuelans exchange outrageous bolivares by weight for other forms of currency – usually US dollars – or for food. People also exchange for high-value bolivares – banknotes that still have declining value. Handicrafts help Cordero and his family manage in their temporary home in Colombia, but he dreams of one day returning to Venezuela.

“I hope things will change in Venezuela. I want to return. There is nothing like our country and I don’t feel comfortable living in another country, ”he said. “The government has dropped everything. I am only waiting for the problems to be resolved so that I can return to Venezuela.

Hyperinflation

The Venezuelan government does not release inflation data, but the opposition-controlled National Assembly Finance Committee calculated that inflation for October 2019 was 20.7% and cumulative inflation for 2019 was 4,035%. Even so, these numbers can be very conservative. The International Monetary Fund estimates that inflation in Venezuela will reach 200,000% this year – and that the economy will contract by 35%.

“Venezuelans first suffered the wave of expropriations and now the hurricane of hyperinflation, which has devastated private enterprise,” said Congressman Angel Alvarado. noted November 14.

Few people in Venezuela use bolivares to purchase goods or services. Most people have turned to US dollars, euros, cryptocurrencies, or barter to survive.

Cordero uses 70 to 1,200 banknotes – each banknote being a 100 bolivares banknote – to make his handicrafts [Sergio Held/ Al Jazeera]

The Venezuelan government, headed by President Nicolas Maduro, is well aware of the situation. In a Nov. 17 interview with former Vice President Jose Rangel – who served at the time of President Hugo Chavez – Maduro said that all the economies in the world use the US dollar for different transactions.

The president also acknowledged that in some sectors of the Venezuelan economy, such as the oil sector, this had also been the case. However, due to hyperinflation, the tendency to use US dollars on the streets instead of bolivares is becoming unstoppable.

“This process which they call dollarization can be used for the recovery and deployment of the productive forces of the country and the functioning of the economy,” Maduro said.

Is the exodus fueling implicit dollarization?

“Venezuela has gradually become dollarized, even supermarket transactions are done in foreign currencies, and many employees are paid in US dollars or euros. However, a significant part of the country still does not have access to foreign currencies, especially the less fortunate, ”Daniel Di Martino, US-based economic analyst and spokesperson for the US section of the Vente Venezuela political movement (Come Venezuela), told Al Jazeera.

The less fortunate often choose to leave Venezuela. Handicraft seller Cordero is just one of some 1.5 million Venezuelans who migrated to Colombia at the end of August, a 39% increase from the previous year, according to data collected by the Colombian government.

Cordero’s way of accessing foreign currency is by taking what’s left of his country’s once-brilliant economy and crafting trinkets with his devalued currency. [Sergio Held/ Al Jazeera]

“I had to leave Venezuela because I have three daughters and a boy,” Cordero said. “The situation is really difficult in Venezuela these days, and I had to go out for a living. “

Like many of his compatriots, Cordero sends money to relatives in his homeland, and in doing so, he contributes to the growing use of foreign currency in Venezuela.

“I expect dollarization to continue naturally as people lose faith in currency and access remittances from family members abroad,” Di Martino told Al Jazeera. . “Ultimately, as more Venezuelans escape the country, even the less fortunate Venezuelans should be able to access foreign currency.”

Cordero’s way of accessing foreign currency is by taking what’s left of his country’s once-brilliant economy and crafting trinkets with his devalued currency – little gifts he hopes will at least retain their sentimental value.