VENEZUELA took almost half its paper currency out of circulation yesterday in a massive blow to the economic war against the country.

All 100 bolivar notes, currently the largest denomination and 48 per cent of legal tender, were withdrawn from circulation to be replaced by newly minted coins and notes in larger denominations.

Citizens had a week-long window to deposit or exchange the notes.

On Thursday, President Nicolas Maduro extended the closure of the Colombian and Brazilian borders for a further 72 hours to stop money-launderers bringing back lorryloads of the now worthless banknotes.

He also announced that the Central Bank of Venezuela in

Caracas would continue to exchange the notes for another five days.

Meanwhile, four people were arrested for trying to deposit sums totalling 31 million bolivars in a branch of private bank 100 Per Cent Banco.

The arrests had an immediate effect on the illegal currency trade, with the black market exchange rate tumbling from around 4,700 bolivars to the US dollar at the start of the week to just 2,500 yesterday.

Criminal gangs had paid 120 per cent of face value for 100 bolivar notes, leading to a chronic shortage of currency at Venezuelan bank counters and cash machines.

Illicit money-trading has contributed to rampant inflation, which, along with smuggling and hoarding of government-subsidised food and fuel and other commodities, has engendered a deep economic crisis.

Former bus driver Mr Maduro has been derided by the right-wing opposition and media as an uneducated buffoon, but he has outmanoeuvred his opponents at home and abroad over the past year.

Despite the Democratic Unity Roundtable (Mud) alliance winning a two-thirds majority in the National Assembly in the December 2015 election, Mr Maduro has headed off its attempts to force him from power.

Efforts to force a presidential recall referendum came to nothing after tens of thousands of signatures on the necessary petition were found to be fraudulent.

The Mud has since joined peace talks with the government mediated by regional bloc Unasur, the Vatican and former leaders of Spain, the Dominican Republic and Panama.

An Opec oil production cap agreed in late November has already yielded dividends, with the price of Venezuela’s main export crude topping $50 dollars a barrel from a historic low of less than $30 in January.

But the US State Department issued an ominous travel warning for Venezuela this week.

“Political rallies and demonstrations occur with little notice and are expected to occur with greater frequency in the coming months,” it said. “If security climate worsens, US citizens should note they’re responsible for arranging their own travel out of Venezuela.”