currency

CARACAS, Venezuela — At the White House, President Trump vows American intervention in Venezuela will pour billions of dollars into the country’s infrastructure, revive its once-thriving oil industry and eventually deliver a new age of prosperity to the Latin American nation.

Here at a sprawling street market in the capital, though, utility worker Ana Calderón simply wishes she could afford the ingredients to make a pot of soup.

“Food is incredibly expensive,” says Calderón, noting rapidly rising prices that have celery selling for twice as much as just a few weeks ago and two pounds of meat going for more than $10, or 25 times the country’s monthly minimum wage. “Everything is so expensive.”

Venezuelans digesting news of the United States’ brazen capture of former President Nicolás Maduro are hearing grandiose promises of future economic prowess even as they live through the crippling economic realities of today.

“They know that the outlook has significantly changed but they don’t see it yet on the ground. What they’re seeing is repression. They’re seeing a lot of confusion,” says Luisa Palacios, a Venezuelan-born economist and former oil executive who is a research scholar at the Center on Global Energy Policy at Columbia University. “People are hopeful and expecting that things are going to change but that doesn’t mean that things are going to change right now.”

Whatever hope exists over the possibility of U.S. involvement improving Venezuela’s economy is paired with the crushing daily truths most here live. People typically work two, three or more jobs just to survive, and still cupboards and refrigerators are nearly bare. Children go to bed early to avoid the pang of hunger; parents choose between filling a prescription and buying groceries. An estimated eight in 10 people live in poverty.

It has led millions to flee the country for elsewhere.

Those who remain are concentrated in Venezuela’s cities, including its capital, Caracas, where the street market in the Catia neighborhood once was so busy that shoppers bumped into one another and dodged oncoming traffic. But as prices have climbed in recent days, locals have increasingly stayed away from the market stalls, reducing the chaos to a relative hush.

Neila Roa, carrying her 5-month-old baby, sells packs of cigarettes to passersby, having to monitor daily fluctuations in currency to adjust the price.

“Inflation and more inflation and devaluation,” Roa says. “It’s out of control.”

Roa could not believe the news of Maduro’s capture. Now, she wonders what will come of it. She thinks it would take “a miracle” to fix Venezuela’s economy.

“What we don’t know is whether the change is for better or for worse,” she says. “We’re in a state of uncertainty. We have to see how good it can be, and how much it can contribute to our lives.”

Trump has said the U.S. will distribute some of the proceeds from the sale of Venezuelan oil back to its population. But that commitment so far largely appears to be focused on America’s interests in extracting more oil from Venezuela, selling more U.S.-made goods to the country and repairing the electricity grid.

The White House is hosting a meeting Friday with U.S. oil company executives to discuss Venezuela, which the Trump administration has been pressuring to open its vast-but-struggling oil industry more widely to American investment and know-how. In an interview with the New York Times, Trump acknowledged that reviving the country’s oil industry would take years.

“The oil will take a while,” he said.

Venezuela has the world’s largest proven oil reserves. The country’s economy depends on them.

Maduro’s predecessor, the fiery Hugo Chávez, elected in 1998, expanded social services, including housing and education, thanks to the country’s oil bonanza, which generated revenues estimated at some $981 billion between 1999 and 2011 as crude prices soared. But corruption, a decline in oil production and economic policies led to a crisis that became evident in 2012.

Chávez appointed Maduro as his successor before dying of cancer in 2013. The country’s political, social and economic crisis, entangled with plummeting oil production and prices, marked the entirety of Maduro’s presidency. Millions were pushed into poverty. The middle class virtually disappeared. And more than 7.7 million people left their homeland.

Albert Williams, an economist at Nova Southeastern University, says returning the energy sector to its heyday would have a dramatic spillover effect in a country in which oil is the dominant industry, sparking the opening of restaurants, stores and other businesses. What’s unknown, he says, is whether such a revitalization happens, how long it would take and how a government built by Maduro will adjust to the change in power.

“That’s the billion-dollar question,” Williams says. “But if you improve the oil industry, you improve the country.”

The International Monetary Fund estimates Venezuela’s inflation rate is a staggering 682%, the highest of any country for which it has data. That has sent the cost of food beyond what many can afford.

Many public sector workers survive on roughly $160 per month, while the average private sector employee earned about $237 last year. Venezuela’s monthly minimum wage of 130 bolivars, or $0.40, has not increased since 2022, putting it well below the United Nations’ measure of extreme poverty of $2.15 a day.

The currency crisis led Maduro to declare an “economic emergency” in April.

Usha Haley, a Wichita State University economist who studies emerging markets, says for those hurting the most, there is no immediate sign of change.

“Short-term, most Venezuelans will probably not feel any economic relief,” she says. “A single oil sale will not fix the country’s rampant inflation and currency collapse. Jobs, prices and exchange rates will probably not shift quickly.”

In a country that has seen as much strife as Venezuela has in recent years, locals are accustomed to doing what they have to in order to get through the day, so much so that many utter the same expression

“Resolver,” they say in Spanish, or “figure it out,” shorthand for the jury-rigged nature of life here, in which every transaction, from boarding a bus to buying a child’s medicine, involves a delicate calculation.

Here at the market, the smell of fish, fresh onions and car exhaust combine. Calderon, making her way through, faces freshly skyrocketing prices, saying “the difference is huge,” as the country’s official currency has rapidly declined against its unofficial one, the U.S. dollar.

Unable to afford all the ingredients for her soup, she left with a bunch of celery but no meat.

Cano and Sedensky write for the Associated Press. Sedensky reported from New York. AP writer Josh Boak in Washington contributed to this report.

Tehran, Iran – Iran’s currency has been registering new lows amid ongoing economic turmoil that is also reflected in a planned budget for next year that effectively shrinks public spending.

Each United States dollar was priced at about 1.36 million rials in the open market on Wednesday in Tehran, its highest rate ever, before the Iranian currency slightly regained ground on Thursday.

The embattled national currency has been rapidly declining over recent weeks as the US and its Western allies pile on their sanctions and diplomatic pressure, and the threat of another war with Israel lingers.

President Masoud Pezeshkian this week sent his administration’s finalised proposed budget to the hardline-dominated parliament for the upcoming Iranian calendar year, which starts in late March. The budget will then have to be greenlit by the 12-member Guardian Council before being ratified into law in the coming weeks.

The presented budget nominally grew by just over 5 percent compared with last year, but inflation currently stands at about 50 percent – indicating that the government envisions lower spending while managing a so-called “resistance economy” as it faces a massive budget crunch yet again.

But minimum wages are to be raised far below the inflation rate, too, at only 20 percent, meaning that Iranians are once more guaranteed to have far less spending power next year as the embattled national currency sinks.

At the same time, the budget says the government sees taxes rising by a massive 62 percent next year, as authorities try to gradually decrease dependence on oil revenues amid US efforts to drive down Iranian exports, which are carried by a shadow fleet of ships mostly to China.

At the current exchange rate, the whole budget is worth about $106bn, several times lower than the projected 2026 budgets of regional players like Turkiye, Saudi Arabia and Israel.

Iran’s rent-distributing multi-tier exchange rate system is still at play, with the government proposing allocating a rate for customs duties, import valuation and budget accounting tables, and another closer to the open market rate used for oil revenue realisation.

An earlier subsidised exchange rate, which was far lower than the open market rate, has now been abandoned. Any excess cash resulting from this is expected to be doled out to low-income Iranians in the form of electronic coupons that can be used to buy essential items like food.

For the first time, the budget is drafted in new rials as four zeros are expected to be removed from the ailing national currency by the time the budget is operational for next year.

After years of back and forth, the parliament in October approved the government plan to lop off four zeros. The move is only cosmetic and will not help with the runaway inflation, but proponents argued it was necessary after years of currency devaluation.

Budget spells grim outlook

Several major factors have already been raising alarm over how bad the economic situation could become next year.

Iranians online reacted poorly to the fact that the government predicts wages will be far outpaced by inflation and tax collection. Others were concerned that eliminating the subsidised rate for essential goods could cause another price shock in the short term.

Many shared a video of Pezeshkian from last year running for president, when he said during a televised interview that the stark disparity between wage increases and inflation is a “grave injustice” being done to the Iranian people.

“Unfortunately, so long as we do not resolve the structural issues, we are making labourers and government workers poorer by the day while those with money get bigger and bigger,” Pezeshkian said at the time.

“This inflation is an additional tax on the poor and the disenfranchised.”

But successive governments have failed to eliminate budget deficits or rein in banks teetering on the brink of insolvency, therefore relying on the central bank to print more money to run the country and, in turn, exacerbate inflation.

Earlier in December, the government proceeded with increasing the price cap of petroleum despite repeated assurances it had no plans to that effect this year. The move has already led to increased transport costs, which will end up taking inflation higher.

There are now four price tiers for petroleum, with the cheapest and lowest quality that is available to most Iranians costing up to 50,000 rials per litre (about $1.19) and higher quality imported fuel delivered this week at 800,000 rials per litre ($19).

Hamid Pourmohammadi, who heads the Plan and Budget Organization of Iran, insisted that the government has devised a 20-point plan to be unveiled soon that will reduce pressure on the livelihoods of Iran’s 90 million population.

“The government is trying to adopt an active approach to address the economic challenges of the people, businesses and economists, so there is no perception of complacency in these economic conditions,” he said.