It doesn't - the currency markets are just adjusting the relative price for supply and demand. The inflation itself is being caused by money printing. Their Gov

It doesn't - the currency markets are just adjusting the relative price for supply and demand. The inflation itself is being caused by money printing. Their Government prints cash, M0 (expand out to Max to see it): http://www.tradingeconomics.com/venezuela/money-supply-m0 http://www.tradingeconomics.com/venezuela/money-supply-m0 And then the banking system multiplies it by f(reserve requirement) modulo any capital requirements: http://www.tradingeconomics.com/venezuela/money-supply-m3 http://www.tradingeconomics.com/venezuela/money-supply-m3 From the ratio of M0 to M3, most of the expansion is from M0, so the Basel capital controls are actually slowing down a runway hyperinflation - to some extent at least. Seems to start in 2012, so I would guess that they started money printing to cover civil service salaries when the oil price dropped, and haven't looked back.