DEFINITION of 'VEB (Venezuelan Bolivar)'

The VEB is the currency abbreviation for Venezuelan bolivar, which was the currency for Venezuela from 1879 to January 2008. The Venezuelan bolivar was made up of 100 céntimos and was presented with the symbol Bs

However, VEB is no longer used as a currency for Venezuela. The currency was switched to bolivar fuerte, the VEF, in 2008. Bolivar fuerte is translated in English as "strong bolivar." Some of the nicknames for Venezuelan bolivar currency are the bolo or the luca.

The Venezuelan bolivar was replaced with the VEF, at a rate of 1000:1 because the bolivar was so devalued due to inflation. VEF is now used as the currency code instead of VEB and the symbol, Bs, has stayed the same.

BREAKING DOWN 'VEB (Venezuelan Bolivar)'

Venezuelan bolivar was initially based on the silver standard where 1 bolivar equals 4.5 grams or 0.1575 ounces of fine silver, until 1910 when the gold standard came into operation. 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.

Limitations of the VEB

Once considered a very strong currency, the VEF is somewhat volatile in the world market currency exchange rate system. Much of the VEF’s limitations originated because the Venezuelan government began putting strict controls on their currency in 2003 in an effort to limit individual’s access to dollars. The government devalues the dollar and places different dollar amounts on imports to make business purchases cheaper. This means that people don’t have access to the same rate that a business does in order to purchase necessary items. For example, the government had a rate of 10 bolivars per dollar for things like food and medicine that were purchased outside of their country.

Additionally, the government uses their own exchange rate for taxes, expenses and royalties and foreign credit card rates. Altogether, this has hurt the Venezuelan economy.

Due to the high rate of inflation in Venezuela, which has led to a lot of demand for US dollars. Without a lot of access to the US 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.

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