Philadelphia, December 12, 2016 (venezuelanalysis.com) – Venezuelan President Nicolas Maduro announced Sunday that his government would be removing its 100 bolivar banknote from circulation in a crackdown on cross-border currency speculation.
“The 100 bolivar bill is null and void in national territory,” Maduro declared, speaking on his television program, In Contact with Nicolas Maduro.
While the measure will go into effect within 72 hours, Venezuelans will have 10 days to deposit or exchange their 100 bolivar bills with the Central Bank.
Currently the country’s highest bill, the 100 bolivar note will be replaced with new higher denomination bills and coins that will enter into circulation on December 15.
The move is part of a government effort to halt the further devaluation of Venezuela’s currency, which lost 55 percent of its value in November alone, going by the black market rate.
Maduro has accused criminal groups in Colombia of driving Venezuela’s spiraling inflation by illegally trafficking vast quantities of 100 bolivar bills across the border.
“It’s calculated that more than 300 billion bolivars are in the hands of international mafias led from Colombia as part of an economic coup,” the head of state indicated.
Since 2000, Venezuela and Colombia have maintained an agreement that allows the direct exchange of bolivars for Colombian pesos without the mediation of the US dollar.
However, since the bolivar began to steadily lose value in 2013, the Colombian border city of Cucuta has reportedly become a hub for the illicit exchange of bolivars, where 100 bolivar notes are sold at 245 pesos in lieu of the official Colombian Central Bank rate of 30,058 pesos.
Flooding into Colombia through Cucuta, 100 bolivar bills are later sold at the much higher Central Bank rate and exchanged for dollars, accruing exorbitant profits.
These dollars are subsequently returned to Venezuela where they are exchanged for bolivars at the soaring black market rate, which in turn are smuggled directly back to Colombia or used to buy Venezuelan goods at subsidized prices for sale across the border.
According to Venezuelan investigative news site Misión Verdad, up through last week 100 bolivar bills were being regularly bought and sold for as much as 140 bolivars in bills of lower denominations.
To this end, President Maduro ordered the complete shutdown of the Colombian border in order to prevent the “mafias” from exchanging their illicit bills in Venezuela.
“I have ordered [Defense] Minister Padrino Lopez and [Interior] Minister Nestor Reverol to immediately close all terrestrial, maritime, and aerial avenues so these bills don’t return to Venezuela and the racket stays in Colombia,” he stated.
Misión Verdad has reported that markets are responding favorably to the measure with the 100 bolivar bill now selling at just 70 bolivars in Cucuta as currency traders seek to jettison the now defunct banknote.