Venezuela currently suffers the greatest devaluation of its history, for which our currency is worthless.
On this occasion I will write about a subject that causes a lot of confusion in my country, I live in Venezuela and here every day the parallel dollar increases, sometimes in a very exaggerated way. Many people do not know why this happens, so I will explain the reason for the excessive increase of that currency with respect to the bolivar.
First we must know that almost everything that we currently consume in Venezuela is imported, that is, it comes from other countries. To buy from them we must have their currency, in this case the dollar. What does this have to do with the increase in the price of the currency?, because due to the high demand of the dollar that exists, most people come to buy the official government dollar directly with them, which due to the high inflation that the country is living, is very economic, the problem is that the amount of dollars offered by this entity is limited and due to high demand it ends very quickly.
By not having access to the government dollar, people start buying dollars in parallel, that is, through other means. Unfortunately, those dollars are not unlimited, which means that people can resell their dollars depending on the supply and demand that exists at that time, ie the amount of dollars that exists in circulation and the number of people who need dollars. By increasing the number of people who need that currency, it increases the value of it, due to shortages, since there are not enough dollars for all Venezuelans. It is there when the negotiation between people begins and basically the price of the dollar becomes the one that the buyers are willing to pay and the sellers to sell.
The situation in the country leads Venezuelans to buy dollars, in order to avoid devaluation.
Mainly because everything in the country is imported, so without the currency traders can not buy products abroad, to bring them to the country. In addition, people who are not merchants acquire the dollars to protect their money from devaluation, due to distrust of the bolivar, caused by constant devaluation. These two situations cause that there are many people who want to acquire dollars and only a limited amount of them, inevitably causing the uncontrolled increase in their price.
This causes the products that are imported to increase more and more, causing the bolívar to become worth less every time. Basically the price of the parallel dollar rises because people desperate to acquire the same, pay whatever for it, thus creating a new price.
What allows currency to acquire value is the interest of people in other countries to obtain and trade with it. This happens when the country is an excellent exporter of products or has one that is highly coveted by other countries, that is, that has a lot of demand. That way the other countries would need that currency to acquire that or those products, which would increase the value of it with respect to the others. What's wrong with our currency?, So simple, our country does not produce almost any product that is high demand for other countries, we export almost nothing and live on imports. Our biggest export product is oil and due to the decline in its price the country's situation has been further aggravated.
For all these reasons, the dollar is very strong, since it is dominated by the main exporting power worldwide, such as the United States, which makes its currency very strong and stable, since all countries need it to buy their products, thus increasing the demand for dollars and consequently their value increases constantly.
In order for the parallel dollar to stop increasing its value so excessively, the government must improve the economic measures that are being taken and begin to produce more in the country, this will reduce the demand for dollars, lower its price and increase the value of our coin.
The devaluation has destroyed our bolivar, but it will soon recover.
