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Venezuela, home to one of the largest oil reserves and a dominant exporter of oil, is predicted to see a major decline in the value of their currency. This once prosperous country is now experiencing a quickly contracting economy, a growing black market, and an accelerating inflation rate. Massive food shortages and a high crime rate have been the result of Venezuela’s desperate situation.

The people question why the Venezuelan government failed to save money when oil prices were high specifically for a crisis like this. Oil exports accounted for 95% of Venezuela’s revenues which provided over 1 million citizens with housing. Socialist policies under former President Hugo Chavez did uplift the economy and citizens from poverty. Though, instead of saving, revenues from oil were used to subsidize goods below the cost of production. A combination of these subsidies, along with strict government policies and overspending on social programs began to lead to a disruption. President Chavez had passed in 2013 and current President Nicolas Maduro continued his policies. Soon after in 2014, oil prices fell 60%, further decreasing Venezuela’s revenues and leading to greater economic downturn. The people are furious and claim that President Maduro is mismanaging the economy as the Bolivar had decreased by its highest value of 45% this past month on the black market.

On the black market, as of November 2016, one U.S. dollar is the equivalent of 1,567 bolivars. In comparison, where one U.S. dollar is ten bolivars on the Dipro exchange rate and 658 on the Dicom exchange rate. Dipro and Dicom are the two legal exchange rates included in Venezuela’s strict currency controls. To decrease the burden on the people, Venezuela temporarily opened its borders to Columbia so that food and other goods may be purchased. Little did they know, the rate is even weaker at 1,737.50 bolivars per U.S. dollar. The black market rate is expected to rise to 4,000 bolivars per U.S. dollar as inflation begins to enter into hyperinflation. The country’s inflation will likely reach a staggering 400% by the end of the year. With less and less reserves in the Central Bank and 13 year low of international assets, Venezuela has nothing to accommodate its money supply.

The people of Venezuela are clinging to the hope of removing President Maduro from office, in turn of events that a change in leadership would better their situation. Venezuela is also relying on the crisis in OPEC to become more optimistic in the coming months. If OPEC were to cut production, they might be able to reduce supply. This would give the potential to balance the markets and benefit Venezuela. Meanwhile, the country continues to face a lack of medical supplies, food and power shortages, and detrimental hyperinflation.

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