Venezuela to replace high denomination money with coins

Venezuela will replace its highest denomination bank notes with coins amid an inflation crisis, the country's government has announced.

President Nicolas Maduro during an hours-long speech said the 100-bolivar bill will be taken out of circulation on Wednesday and Venezuelans will have 10 days after that to exchange those notes at the central bank.

Critics said the move, which Mr Maduro said was needed to combat contraband of the bills at the Colombia-Venezuela border, was nonsensical because there would be no way to swap all the 100-bolivar bills in circulation in the time the president has allotted.

Central bank data showed that in November, there were more than six billion 100-bolivar bills in circulation, 48 percent of all bills and coins.

Authorities on Thursday are due to start releasing six new notes and three new coins, the largest of which will be worth 20,000 bolivars, less than $5 on the streets.

No official inflation data is available for 2016 though many economists see it in triple digits. Economic consultancy Ecoanalitica estimates annual inflation this year at more than 500 percent.

The oil-producing nation’s bolivar currency has fallen 55 percent against the US dollar on the black market in the last month.

"When ineptitude governs! Who would possibly think of doing something like this in December amid all our problems?" two-time opposition presidential candidate Henrique Capriles wrote on Twitter, referring to the upcoming Christmas holiday.

Mr Maduro previously has said that organized crime networks at the Colombia-Venezuela border buy up Venezuelan notes to in turn buy subsidized Venezuelan goods and sell them for vast profits in Colombia.

Paying a restaurant or supermarket bill without a debit or credit card can often require a backpack full of cash. However, getting cash in recent months has proven difficult, and the country’s credit-card machines have recently suffered problems, leaving many businesses asking customers to pay by bank transfer.

Strict currency controls introduced in 2003 that pegged the bolivar to the dollar, coupled with heavy reliance on oil, are seen as the root of the crisis by most economists. Mr Maduro has blamed an "economic war" being waged against his government by the opposition and the United States.

Reuters