(Bloomberg) -- Venezuela’s currency devaluation is so out of control the stock market is about to bust.
Regulators say they have to lop three zeros off the price of equities on the exchange after determining its computers could no longer handle the swelling values for local shares as the bolivar has tumbled more than 99 percent versus the dollar in the past few years. The change takes effect May 2.
The Caracas index has surged 1,584 percent this year alone -- following a 3,884 percent gain in 2016 -- but it has nothing to do with confidence in the country’s companies. Instead, local businesses and individuals are piling into equities in a desperate bid to protect their savings from a plunging currency and quadruple-digit inflation. The government had already announced plans to redenominate the bolivar by a factor of 1,000 in June, but stock-exchange officials had to act sooner to avoid coming up against technical limitations.
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