Currency redenomination as of January 1st, 2008

New currency basket will include 1 -cent and 12.5 -cent coins 

The currency redenomination process undertaken by the Central Bank of Venezuela and the National Executive as of January 1st, 2008 will include 1-cent and 12.5 -cent coins.

The announcement was made today by the president of The Central Bank, Gastón Parra Luzardo, in a televised interview in Venevision. Parra Luzardo was accompanied by director Armando León, who explained that in the new monetary basket, 10 bolivars, as the Venezuelan currency is known, would be worth 1new cent, while 125 bolivars would be worth 12.5 cents.

BCV’s authorities determined that the introduction of these denominations within the Venezuelan basket (banknotes and coins) will reduce the need for rounding. Parra Luzardo pointed out that the new designs on banknotes and coins will give emphasis to nationality, Venezuelan ethnic roots and women.  

Apart from the already mentioned coins, there will also be coins in the following denominations: 1; 0.50; 0.25; 0.125; 0.10; 0.05; 0.01 and banknotes in the following denominations: 100, 50, 20, 10, 5, 2.

As of January 1st, 2008, three zeros will be eliminated from the denomination. This means that 1,000 Bs. as the Venezuelan currency is known, would be worth 1 Bs.F. “bolivar fuerte” .The measure necessarily means that all prices, salaries, bonds, taxes, pensions, and , in general, any transaction or reference to the old currency, should be changed into “bolivar fuerte” by dividing said amounts by 1,000.

There would be a period of transition of six months in which both, the old and the new currency would coexist. After this period, currency exchange will continue as long as necessary, so that people could change old currency for new currency at financial institutions and also at BCV.

Parra further explained, “Currency redenomination will not alter the relative value of incomes, expenses, goods or debts”. If a person has saved 1,000,000 old bolivars, they would be worth 1,000 “bolivar fuerte” after the redenomination process. This does not mean that her savings have decreased but that they will be expressed in a new monetary scale.

Likewise, BCV’s president denied that this measure implies devaluation since the same conversion factor 1,000 to 1 will be applied for foreign monetary terms. This means that, at the official exchange rate (Bs/$ 2,150) one dollar will be worth 2.15 Bs.F.  

The Central Bank of Venezuela indicated that the currency redenomination process will be accompanied by an informative and educational campaign that will contribute to get the public ready for this change and to easily assume it with confidence.