What is the BOB (Bolivian Boliviano)
The Bolivian Boliviano (BOB) is Bolivia's national currency, issued by the Banco Central de Bolivia. Each Boliviano subdivides into 100 centavos. Although currency named the boliviano has existed in the country since 1864, the current iteration represents its second incarnation and dates from 1987.
BREAKING DOWN BOB (Bolivian Boliviano)
The current issue of the Bolivian Boliviano (BOB) began circulation in 1987 as the national currency for the officially named Plurinational State of Bolivia. However, an earlier coin also carried the same name.
When first introduced in 1864, the boliviano replaced the Bolivian scudo at a rate of 1 boliviano to 0.5 Bolivian scudi. At the time, the boliviano pegged to the French franc (F) at a rate of 5 francs to 1 boliviano. In 1908 Bolivia abandoned this pegging and moved to the gold standard, pegging the currency at 12.5 bolivianos to 1 British pound (GBP). The boliviano underwent a series of devaluations against the pound between 1928 and 1938, by which point the peg rate had increased to 160 bolivianos to 1 British pound.
In 1940, the government began accepting multiple exchange rates against the U.S. dollar. By 1963, however, the government responded to the boliviano’s continued devaluation by replacing it with the peso boliviano (BOP) at a rate of 1,000 to 1. Continued inflationary pressures led Bolivia to replace the peso boliviano with the second boliviano in 1987, introducing it roughly at par with the dollar, or 1 million new bolivianos per 1 peso boliviano.
Since 1987, the central bank has allowed the boliviano to float freely against other currencies. The government has also targeted inflation since that time, through partial privatization of public-sector businesses and legislative policymaking designed to promote private investment. Since 2008, the boliviano’s value has held relatively stable against the U.S. dollar in a band between roughly 6.7 and 6.9 bolivianos per 1 U.S. dollar. At the same time, the inflation rate has gradually come under control and has remained under 10% since 2012.
Common cross trades involving the Bolivian boliviano include major world and Latin American regional currencies.
Bolivian Economy Impacts Boliviano Inflation
Landlocked Bolivia was a Spanish colony beginning in 1524 as the area was rich in sources of silver. The first attempt at independence came in 1809, followed by 16 years of fighting until final declaration in 1825. A period of warfare between Bolivia, Peru, can Chile lasted throughout the rest of the 19th century. Throughout these years, Bolivia's borders shrunk due to this fighting.
In the 20th century, exports turned from silver to tin, and the population lived in a near-feudal situation without education, sanitation, or access to political participation. Falling commodity prices, unemployment, and rising internal prices continue to hinder Bolivia.
Economists generally believe Bolivia’s economy has improved steadily in recent years, though the World Bank continues to classify it as a lower-middle-income country. World Bank data from 2017 shows the nation experiences 4.2% annual gross domestic product growth with a 6.1% yearly inflation deflator.
Major agricultural exports include cocaine, soybeans, cotton, coffee, and sugarcane. Mining remains a cornerstone of the nation’s economy, with significant natural resource products including natural gas, gold, silver, tin, and zinc. The country also has large deposits of lithium, currently in high demand for batteries used in electronic devices and hybrid automobiles.