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UPDATE 2-Venezuela to cut six zeros from prices amid hyperinflation

·2 min read

(Updates with context, quote from economist)

CARACAS, Aug 5 (Reuters) - Venezuela will cut six zeros from prices as of Oct. 1, the central bank said on Thursday, the second time in three years the economically devastated South American nation has overhauled its decimated bolivar currency.

The measure will do little to address a brutal economic collapse that has forced millions to leave the country, but could make some basic accounting simpler.

Much of the economy has been dollarized since President Nicolas Maduro largely scrapped currency and price controls in 2019, meaning the practical impact of the measure is even less relevant than the 2018 monetary overhaul.

"The bolivar will not be worth any more or any less, in order to facilitate its use, it is being taken to a simpler monetary scale," the central bank said in a statement.

Maduro in 2018 cut five zeros from prices as inflation hit 1.8 million percent. That came on top of late socialist leader Hugo Chavez's 2008 monetary overhaul that cut three zeros from bolivar prices.

Maduro has for years blamed inflation on U.S. sanctions meant to force him from power, as well as an "economic war" he says was carried out by business leaders and political adversaries.

Economists and opposition leaders say inflation is caused by the central bank's indiscriminate expansion of the money supply to finance government spending.

"Now you know: Eliminating 11 zeros in three years is a way of making things easier," tweeted economist Luis Oliveros.

The country's economy is in tatters following years of hyperinflation, the decay of its once-powerful oil industry, and U.S. sanctions that have crippled its crude export earnings.

Economists say significant improvement to the situation will require major infrastructure investments, which are currently impossible due to a lack of capital and sanctions that leave most foreign companies reluctant to operate in Venezuela. (Reporting by Deisy Buitrago and Vivian Sequera; writing by Brian Ellsworth; editing by Jonathan Oatis)