Venezuela’s currency has become so worthless that it makes more sense to turn colorful bolivar bills into a purse than to spend them on a purse — or anything else.
So that’s what Alvaro Rivera and other artisans in one small Colombian town along the Venezuelan border are doing — using the once mighty bolivar as raw material to make handbags, bird sculptures and other curios.
The largest handbag Rivera sells on the streets of Cúcuta is painstakingly woven from 1,000 individual bills totaling 100,000 bolivares. The value of that cash at money exchange houses in Cúcuta? Seventeen U.S. cents. The bag, on the other hand, sells for $13 dollars.
“The price of the work has nothing to do with how many bills I use,” Rivera explained. “What I’m selling is the art.”
Venezuela’s economic collapse has been so deep and dramatic that it plays out in ways that defy the imagination. The Central Bank has quit publishing most economic data, but Venezuela’s congress says annual inflation hit 24,600 percent in May.
That’s as if your bag of groceries, which cost $15 dollars a year ago, now costs $3,960 dollars. And as prices have soared, wages and the currency itself haven’t kept pace.
While goods in dollar terms are cheap in Venezuela, those earning bolivares can no longer afford the basics. To feed a family of five for a month costs 20 times the monthly minimum wage, according to the Center for Labor Research and Analysis, CENDA, a Caracas-based nonprofit.
The crisis is forcing millions of people to flee the country, often to neighboring Colombia, in order to escape hunger and get their hands on any currency other than the bolivar.
In Cúcuta, more than 20,000 Venezuelans cross the border every day, some leaving for good and some just hoping to earn a few pesos.
Anderson Gutierrez, a 45-year-old orthopedist from Caracas, has spent the last three months prowling the international bridge doing odd jobs. On a recent weekday, he was trying to persuade Venezuelan women to sell their hair to Colombian wig-makers. On a good day, he makes about 50,000 Colombian pesos in commission, or about $18 dollars — a fortune if he takes it across the river to San Cristobal, Venezuela.
“I go to the other side to sleep,” Gutierrez said, explaining that the hotels in Colombia were too expensive. “But it’s really sad over there. There’s nothing to buy. Finding food to eat can take hours.”
Scrambling to keep up with the runaway prices, Venezuelan President Nicolás Maduro has increased the minimum wage three times this year alone. Now the basic monthly wage is 1 million bolivares. At the official exchange rate, which few people have access to, that salary is equivalent to $13 dollars. But on the black market, where most people are forced to exchange their money, it’s less than $2 dollars.
“Venezuela’s minimum wage won’t even buy you a Coca-Cola over here,” said Andreina Velasquez, 33, who has been working as an informal travel agent in Colombia to try to support her child back home.
And while the government has said it's going to roll out new "sovereign bolivar" bills and create a new price structure to tame hyperinflation, it keeps delaying the implementation.
Another mind-bending aspect of Venezuela’s crisis is that while bolivar bills are worthless, they’re also incredibly hard to find. According to Bloomberg, the government no longer has enough money to buy money. And so most merchants — from fruit vendors to taxi drivers — now rely on bank transfers for even the smallest payments.
Velasquez says that paper money has become so scarce that it’s selling at a premium. If you want 100,000 bolivares in your hand, for example, you have to transfer 250,000 bolivares to the seller’s account.
Maduro has blamed shadowy forces and “economic warfare” for his nation’s troubles. In his telling, websites like DolarToday, which publish the black market bolivar-dollar exchange rate, are undermining the currency. And he blames the lack of physical bills on mafias that are hoarding and hiding bolivares.
The streets of Cúcuta seem to support those fears. As Rivera, the currency artist, was weaving a handbag made out of 100 bolivar bills, a group of three Venezuelans stopped to stare.
“I haven’t seen one of those in months,” one man said.
The reason the bills are prevalent in Colombia and along the Venezuelan border but harder to find in Venezuela's interior is a product of market forces. As Venezuelans leave their country, they often exchange their savings in Colombia for pesos, or other currency, to continue their journey.
Merchants along the border then use bolivars to buy Venezuelan toothpaste, mayonnaise, gasoline and other price-controlled goods that can be resold at massive markups in Colombia.
Girish Gupta, a former journalist and the founder of Data Drum, a website that collects and crunches economic data from Venezuela and other countries, says the government’s own figures provide clues to the crisis.
While the administration can’t afford to print or import physical bills, it’s creating electronic money at rates seen nowhere else in the world, he said.
In the last year alone, Venezuela’s monetary base — a combination of all the physical and electronic money in circulation — has increased 6,222 percent, according to Central Bank figures. And over the last three years it has increased a staggering 50,000 percent. By comparison, the United States’ M2 money supply (a broad measure of money in circulation) increased 3.7 percent in the last year.
In that sense, Venezuelan authorities don’t need “economic warfare” or other boogeymen to explain the economic pain.
“They are printing so much money, in a metaphorical sense, that of course we’re going to have hyperinflation,” Gupta said. “No other country in the world is printing money like that.”
Just a few yards from where the artisans were busy working last week, several hundred Venezuelans had started lining up at 3 a.m. to receive transfers at a Western Union. Capino Porra, a merchant and retired Venezuelan military official, said that each month he travels three hours and then waits all day in line to receive the equivalent of $400 dollars from relatives in Europe.
At the equivalent of Western Union across the border in Venezuela, that money would be paid at the official rate of 80,000 bolivares to the dollar. That means Porra saves the equivalent of $347 dollars in the exchange-rate differential just by stepping into Colombia.
As he opened up his wallet, Porra handed out 50 and 20 bolivar bills as gifts to people around him.
Holding up a 100 bolivar note, he said, “It would make more sense to rip this up and turn it into confetti than to try to use it to buy confetti, which would be more expensive.”
Rivera, the artisan, said he’s been doing good business with his currency crisis handbags and sculptures. And he’s developed a killer sales pitch. If the bolivar should ever magically regain its value, he said, “You can take apart the purse and spend it.”