In Venezuela, the U.S. dollar becomes king amid crushing crisis – Miami Herald

Ángel Molina, a 33-year-old Venezuelan graduate in philosophy and linguistics, lived his worst year in 2016. His entire family leaned on him financially soon after his stepfather had to quit his job when he was diagnosed with lung cancer.

He took multiple jobs, as an editor of legal documents, tutoring and revising company manuals, but his monthly income in bolívares, the Venezuelan currency, was still insufficient to buy food and medicine for both of his parents and himself. He lost several pounds of weight in just months.

“My pants size was reduced twice,” Molina said.

It all changed in a snap when he took an online job as reviewer of style manuals for a private university based in Costa Rica, which paid a monthly wage of $200. His new payment felt like a fortune. It was 30 times more than the current minimum monthly wage in Venezuela (18,000 bolívares or about $6). From day to night, Molina was able to afford the basics for his family.

He even began to treat himself and his girlfriend through hobbies and purchases, which Venezuelans refer to as “luxuries” since the rough economic times began take hold about four years ago. He started to travel, eat out or kick back with a few beers at a bar.

“I bought medicines for my mom to treat facial cellulitis,” he said with a smile. “I got to buy a new computer, new clothes. I’m actually a little overweight now.”

A third of the 30 million Venezuelans, Molina among them, are earning and handling U.S. dollars on a daily basis, estimates Ecoanalítica, a Caracas-based consulting firm. Hundreds of thousands of Venezuelans have pinned their hopes on the American currency, trying to make profits on “greenbacks” or receiving remittances from relatives living abroad.

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Jorge Corbero, originally from Caracas, Venezuela, sits on his bed as he uses the Venezuela bolívar, which has such little value, to make purses and other items to sell on the street.

Joe Raedle Getty Images

Pulverized bolívar

The economic meltdown in Venezuela has shattered the U.S. dollar strength in inner markets, though. Inflation rates became so fierce that it is almost impossible to live comfortably with just a couple of hundred bucks.

Cendas, a research center on the needs of the Venezuelan working class, concluded last February that a family of five members needed about 1.4 million bolívares, approximately $400 dollars, to fulfill their basic needs. That was 200 percent more than the previous month. Money, even in dollars, does not pay that much anymore in Venezuela, Molina admits.

“I used to pay for dinner for my girlfriend and friends with only $8. Now, I need at least twice that, if not more,” he said.

Once a wealthy country, Venezuela is suffering the collapse of its economy amid corruption, failed socialist policies, hyperinflation and maladministration. Then there is the ongoing standoff between Nicolás Maduro — who remained in power following an election criticized as fatally flawed — and the internationally recognized interim President Juan Guaidó, who leads the National Assembly.

The political duel has spilled into the international arena with the United States and more than 50 other countries backing Guaidó while Russia, China and Cuba firmly support Maduro. It has also included massive street demonstrations, violent clashes with police and military forces and dozens of detentions of Guaidó supporters as well as journalists.

Amid threats of arrest, Guaidó recently went back to Venezuela to continue his campaign for a transition government and fair elections after a short tour in neighboring countries, following a failed effort to bring tons of humanitarian aid to Venezuela from Colombia, Brazil and Curacao.

But, while Venezuelans wait for a political outcome, prices are increasing at a daily rate of 3.5 percent. The bolívar has become so worthless that the U.S. dollar sets the guidelines for the economy. Venezuela has experienced hyperinflation for 14 months in a row, explains Jesús Casique, economist and head of Capital Market, a financial consulting firm.

“That’s why thousands of people seek hard currency to protect their incomes and assets,” he said. “The bolívar was pulverized by hyperinflation.”

The Venezuelan government has set in motion several foreign exchange control mechanisms since 2003. They all resulted in economic instability and contraction of the gross domestic product and did little to benefit private companies. Since prices are increasing rapidly, more dollars are needed to satisfy goods and services of those Venezuelans, Casique said: “We the economists have a saying: ‘Salaries use the stairs and the hyperinflation uses the elevator.’ ”

No more luxuries

Venezuelans are divided in two economic classes nowadays. There are those with access to dollars, mainly in middle and upper class sectors, and there are others with none at all, the nation’s poorest. It’s like witnessing those with umbrellas and raincoats under a heavy rainstorm while others have no protection at all.

Martha, a graphic designer from Aragua state, who requested that her last name not be revealed for fear of reprisals, receives $1,000 a month for her two online jobs for companies from Panama and Venezuela. She exchanges just a few dozen dollars into bolívares every week, not more than the exact amount that she’ll be spending on food, medicine, bills and the construction of her mom’s new house.

“With my first payment, in 2017, I bought food for the whole week and I took my kid out to have ice cream with just $10, and there was still money left!” Martha said. “As the months went by, though, I’ve been selling $50 or more to do exactly the same thing.”

The U.S. dollar determines the cost in the Venezuelan economy. Products and services fees are set according to the fluctuation of the American greenback in currency black markets. Its rate in bolívares may change as often as five times a day. The same pair of shoes, for example, can cost $20 one minute and increase to $30 the next.

Customers can use bolívares and dollars to pay for most products. Regular citizens can pay in dollars for valet parking at a mall, for example. And many Venezuelans use credit cards from U.S. banks to make purchases. It suits them better since the official rate of U.S. currency — set by the government — became a little higher than the one in the black markets. The political instability is likely to drive up prices even further, said Casique, the economist.

Yvette Morante de Durán, a 43-year-old economics graduate, says she is used to quickly calculating prices in dollars when she sees the cost of items displayed in bolívares at supermarkets. One day, she saw a one-pound powdered milk pack that cost $2 or 5,000 bolívares in a supermarket near her house. When she decided to make the purchase at the same store three days later, the price tag was $5.

“The bolívar is practically dead, yes, but not even the fact that we have salaries in dollars is guaranteeing our power to buy groceries,” said Morante, who makes a living selling foreign insurance policies.

Her husband, Tito Durán, a former English teacher at a private university, quit his job to work at a call center for an American health company based in California.

“Some might think that we the Venezuelans can pay for luxuries if we’re earning U.S. dollars in Venezuela,” Durán said. “That’s not our case. No one in our household is eating cream cheese or going to the movies more often.”

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Yvette Morante de Durán and her husband Tito Durán say few can afford luxuries in Venezuela.

Gustavo Ocando Alex Special to the Miami Herald

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