In an effort to reduce Venezuela’s inflation rate, the highest in Latin America, President Hugo Chavez has revived the colonial “locha” coin:

The locha is worth 12.5 cents, or an eighth of a new “strong bolivar,” a currency that debuted today with seven new coins and six new bills. Chavez says the new bolivar, created by lopping three zeros off the old currency, will simplify pricing and help slow consumer price increases.

“During the 1940s and through the 1960s, the locha was one of the most popular coins,” Armando Leon, a director of the central bank, said in an interview in Caracas. “It circulated during a very long period of stability.”

You can’t spell colonialism without colon! Wait. What?

Chavez may be bringing back the locha to restore confidence in the economy amid the fastest inflation in almost five years and shortages of milk, eggs and sugar. If so, the attempt isn’t likely to succeed, said Miguel Carpio, chief economist at Banco Federal SA in Caracas.

“One of the intentions of this monetary conversion is, in some ways, to bring back these memories of good times, when really the indicators say the opposite,” Carpio said.

Well, we hope money and good can begin to flow regularly and firmly through Venezuela sometime soon.

Chavez Revives Historic Coin in Campaign to Reduce Inflation [Bloomberg]