Venezuela 'paralysed' by launch of sovereign bolivar currency Published duration 21 August 2018 Related Topics Venezuela crisis

media caption Venezuelans are fleeing political instability and hyper inflation

Venezuela came to a standstill on Tuesday as the country tried to deal with its newly introduced currency.

Thousands of businesses closed in order to adapt to the "sovereign bolivar", and many workers stayed at home.

President Nicolás Maduro launched the new banknotes on Monday, revaluing and renaming the old bolivar currency.

The government says this will tackle runaway inflation, but critics say it could make the crisis worse. The notes went into circulation on Tuesday.

President Maduro had declared Monday to be a bank holiday.

Analysis: Confusion reigns in the oil-rich nation

By Will Grant, BBC Latin America correspondent

Much of Caracas is eerily empty for a working day. Some in the opposition called for a strike but many people are simply staying at home out of uncertainty, too concerned about what the new currency will mean for the embattled nation to venture out.

The result is that Venezuela is, in essence, a paralysed country. Confusion reigns in the oil-rich nation and, historically, such moments in Venezuela can be extremely volatile.

As yet, there are no reports of significant protests or violence, but there is an increased deployment of the security forces across the country for the roll out of the new bolivar.

President Nicolás Maduro has said the measure will be the saviour of the economy and tackle the spiralling hyper-inflation. Ordinary people however, simply don't believe him and are concerned for the future, putting even greater pressure on neighbouring countries struggling to deal with the exodus of millions of Venezuelans.

The new currency lops five zeroes off the old "strong bolivar" - meaning a cup of coffee worth 2.5m strong bolivars in the capital Caracas last month now costs 25 sovereign bolivars.

However, people in Caracas told the BBC they were restricted to withdrawing only 10 sovereign bolivars on Tuesday from cash machines.

image copyright Reuters image caption The new sovereign bolivar was introduced in a bid to tackle hyperinflation

Separately on Tuesday, Venezuela was shaken by a powerful earthquake along its northern coastal region that was felt in Caracas, where many of the city's buildings were evacuated.

US seismologists reported a magnitude 7 quake with an epicentre in the east of Venezuela, while the Venezuelan authorities recorded a magnitude 6.3 quake.

Eyewitnesses in the coastal town of Cumana described residents rushing into the streets, according to Reuters news agency. No casualties were reported.

Earlier, cities across Venezuela were virtually deserted as people struggled to get hold of the country's new banknotes.

Venezuela's black market in dollars was even frozen by the currency shift amid confusion and economic uncertainty.

The government announced several other key economic changes to accompany the new notes, including raising the minimum wage by 34 times its previous level from 1 September, raising VAT and cutting generous fuel subsidies

President Maduro also said the sovereign bolivar would be tied to the petro, a virtual currency the government says is linked to Venezuela's oil reserves.

But the US has banned its citizens from trading in it, and one cryptocurrency site, ICOindex.com, has even labelled the petro "a scam".