The diplomat does not know how long it will take for the country to recover the value of its currency. Most business transactions are now happening in US dollars.
The Foreign Minister of Venezuela, Jorge Arreaza, assured in a recent interview that the use of the US dollar for commercial transactions in his country would be “temporary.” The official stressed that the primary goal of the government of Nicolás Maduro is to revalue the bolivar, the national currency.
Arreaza admitted that he does not know how long it will take the country to strengthen its currency sign. Speaking to the AFP news agency, the foreign minister said that the rescue process could take years, only in a parallel collaboration action with the Central Bank of Venezuela (BCV).
«It is not ideal, and it will be temporary. How long will it last? One, two, three, four years? Our goal is to reposition the bolivar. A relevant aspect is that trade only happens through the dollar, and we are ducking in front of the Federal Reserve asking for dollars, “Arreaza explained.
For Arreaza, it is “paradoxical” that there are more dollars than bolivars in the streets of Venezuela, something that would be clashing with the principles of monetary sovereignty that the socialist government has raised for years.
Arreaza justified the situation by saying that the US sanctions against government officials are affecting. Besides, he mentioned that, geographically, Venezuela is in the “geopolitical area of control of the United States.” According to the foreign minister, 77% of the country’s commercial transactions in 2020 occurred in bolivars.
The Economic and Monetary Crisis is Guiding Venezuela to Ruin
Venezuela is currently going through a biting economic crisis. Hyperinflation, the devaluation of the bolivar, and the shortage of money are guiding the country to systematic destruction. To preserve the value of their funds, Venezuelans charge and pay for most products and services in dollars; this, even if it is not the official currency.
A study by Ecoanalítica firm affirms the dollar triples the price of the bolivar as a means of payment. In its most recent investigation on dollarisation in Venezuela, the agency indicated that 90% of operations happen in foreign currency. 61% of revenues in the country come to effect with cash dollars.
There is a Different Reality in the Colombo- Venezuelan Border
There is a somewhat different reality in the border area with Colombia, with millions of Venezuelans paying with the currency of the neighboring country, the peso, rather than using the bolivar itself or the dollar. A similar situation occurs on the border with Brazil, where the predominant currency for operations is the Brazilian real.
Another segment of Venezuelans has found refuge in bitcoin (BTC) and other cryptocurrencies as an alternative to safeguard capital. The country would already be the third with the highest adoption of crypto assets, according to a report by the firm Chainalysis.
Venezuela had discussed a dollarisation plan with private banks the previous year, but some institutions began promoting new dollar accounts and custody services in foreign currency.
By: Jenson Nuñez