The president of Venezuela has announced a radical economic reform that will see the country's currency tied to the government's own petro cryptocurrency.

Nicolas Maduro said the plan would involve devaluing the bolivar from 285,000 per dollar to 6 million – a drop of 96 per cent. Before the announcement, inflation in Venezuela was projected to hit 1,000,000 per cent this year, though it is unclear whether Maduro's strategy will help reduce this.

The currency overhaul will also be supplemented by a massive increase for the minimum wage, higher corporate tax rates, and increased subsidies for gas prices.

"I want the country to recover and I have the formula. Trust me," Maduro said on state television on Friday. "They've dollarized our prices. I am petrolising salaries and petrolising prices.

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He added: "We are going to convert the petro into the reference that pegs the entire economy's movements."

The petro cryptocurrency was launched earlier this year, initially to supplement Venezuela's free-falling currency, circumvent US sanctions and access international financing.

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Cryptocurrencies are also notoriously volatile in price, with bitcoin fluctuating in value between $5,000 and $20,000 since last December.

To get around this, petro was designed to be backed by the country's reserves of oil, gas, gold and diamonds, however it has been widely discredited.

Within a month of launching, US President Donald Trump signed an executive order that banned Americans from investing in the cryptocurrency.

Picture of 10,000 bolivar-bills taken in Caracas on July 26, 2018 (AFP/Getty Images)

The Weiss Cryptocurrency Ratings said petro was "bound to fail", and that its white paper did not sufficiently explain how the cryptocurrency would be tied to oil prices.

"We now have the first-ever state-sponsored cryptocurrency. But it's not exactly time to celebrate," crypto expert Juan Villaverde said in a blog post for the financial rating agency.