How can I show change over time for the Venezuelan financial crisis?

Sometimes official data isn’t the best data.

Photo: Rayner Pena/dpa (Photo by Rayner Pena/picture alliance via Getty Images)

The goal is to capture the magnitude of the financial crisis in comparable terms, a line or bar chart varying over location and time. Graphics can bring financial stories to life. But too often we grab data without questioning the source. Even when the source is considered “official.” This is a cautionary story about the value of official data.

Sometimes official data isn’t the best data.

The Goal

The goal is to capture the magnitude of the financial crisis in comparable terms, a line or bar chart varying over location and time.

One way to quantify the shock is through foreign exchange data. Currency values can be tracked through the US Federal Reserve foreign exchange dataset, a public domain data service.

• USA Federal Reserve Data Download Program
• How to use the Federal Reserve Board’s Data Download Program

The exchange rate for the Venezuelan bolivar was calculated using the “bolivar fuerte” rate through Friday August 17 and the “bolivar soberano” rate multiplied by 100,000 beginning Monday August 20. This was an epic event, and it represented an effort to bring the official exchange rate into line with the actual “black market” exchange rate.

The Venezuela financial crisis created chaos and heartbreak in the lives of its people over years.  Does official exchange data reflect that tragic reality?

Without a subject-matter expert, a solitary data scientist could miss the fact that it is the difference between the official and black market exchange rate that often matters in Venezuela. 

Don’t make the mistake of thinking that “official” data is best. In this case, the “black” market was the only real market.

The Moral of the Story

Never take official data at face value. Even if it comes from the USA.

Go Deeper

You can’t get $1 out of the bank in Venezuela. I tried. ”
— Stefano Pozzebon  CNN Money on January 17, 2018: 8:13 AM ET

CNN journalists explain that this reporter could not withdraw a dollar from a bank. The “official” exchange rate was not being honored in the real world.

In most of the world, getting a little money out of the bank is an errand, something forgettable. In Venezuela, for millions of people, it is complicated, tedious and surreal, or just impossible.

I moved here a year and a half ago to cover the country’s economic crisis as a freelance journalist. I knew how bad things were, but I never imagined the constant daily struggle to achieve even the simplest of tasks.

As Venezuela has sunk to new depths, prices have skyrocketed, and the currency, the bolivar, has become next to worthless. Supermarkets and banks have become scenes of confusion and chaos: Are they open? Do they have money or food? How much can I get?

— You can’t get $1 out of the bank in Venezuela. I tried.by Stefano Pozzebon  CNN Money on January 17, 2018: 8:13 AM ET

Bloomberg also tracked local reserve requirements to show the deepening crisis.

• Venezuela Orders New Reserve Requirements for Banks by Fabiola Zerpa, Bloomberg News on September 3-4, 2018

Featured Image Credit: Photo by lalo Hernandez on Unsplash.