What is the VEB (Venezuelan Bolivar)
The VEB was the currency abbreviation for Venezuelan bolivar, which was the country's currency between 1879 and January 2008. The currency now in use is the bolivar fuerte (VEF), which translates "strong bolivar" in English. Some of the nicknames for Venezuelan bolivar currency are the bolo or the luca.
Due to the inflationary devaluation of the VEB, the replacement currency saw funding at a rate of 1000:1. In August 2018, the government further devalued the bolivar by 96-percent. This action as sent a panic through the population as they try to access fund through ATMs.
BREAKING DOWN VEB (Venezuelan Bolivar)
The Venezuelan bolivar (VEB) was made up of 100 céntimos. This currency initially drew its basis from the silver standard where one bolivar equated to 4.5 grams or 0.1575 ounces of fine silver. The money remained valued on the silver standard until the gold standard came into operation in 1910. In 1934, the bolivar became fixed to the U.S. dollar at a rate of 3.914 bolivar to 1 U.S. dollar.
The currency remained very stable compared to others in the region until the 1970s, when rampant inflation began to erode its value and forced the change to the new bolivar fuerte (VEF) currency.
From VEB's Black Friday to a New Venezuelan Currency
At one time the Venezuelan bolivar (VEB) was seen as a stable currency. However, a fall in the price of oil and reduced exports damaged the country's currency. By 1983, with a central bank nearly empty of foreign exchange reserves and mounting debt, the president devalued the currency by 100%. Banks remained closed as the population scrambled to exchange the VEB for U.S. dollars. Known as Venezuela's Black Friday, the government declared insolvency and banned the public from purchasing dollars. Inflation skyrocketed and brought the VEB to its knees, forcing the change to the bolivar fuerte (VEF).
The VEF is somewhat volatile in the global currency exchange market. Much of the VEF’s limitations originated because the Venezuelan government began putting strict controls on their currency in 2003 to limit individual’s access to dollars further. As inflation continues to devastate the Venezuelan economy, the government and central bank have again decided to redenominate its currency.
The new money will be known as the bolivar soberano or sovereign bolivar (VES) and is expected to take effect sometime in 2018.
Due to the high rate of inflation in Venezuela, the demand for U.S. dollars has increased. Without access to the dollar, however, the currency rate can increase with black market activity. For example, the unofficial black-market exchange rate has been valued as high as 225,000 VEF per 1 USD.