Business & Economy

Once-maligned dollar serves as de facto currency in crisis-hit Venezuela

By Sabela Bello

Caracas, Jul 31 (efe-epa).- The hyperinflation of Venezuela’s bolivar has forced leftist President Nicolas Maduro’s administration to put aside its longstanding criticism of the United States dollar and reluctantly accept the greenback as the nation’s de facto currency.

Maduro, in fact, admitted late last year that the currency of his country’s most bitter rival offers an escape valve amid devastating US sanctions on the country’s lifeblood oil industry, even telling local television channel Televen “thank God” for dollarization.

The head of state’s embracing of the greenback in November 2019 paved the way for the subsequent dollar pricing of gasoline, a commodity that had been dirt cheap in the crude-rich country but which now is only widely available for those able to pay at the pump in the US currency.

But some situations that have arisen in connection with dollar usage have left people puzzled, including the fact that the government – which controls fuel distribution in Venezuela – requires payment in dollars but does not provide receipts showing the transaction was effected in that currency.

People rarely ask for an explanation from the government, and none is ever given.

And despite the recent verbal acknowledgment and tacit acceptance of dollar transactions by Maduro, who had previously blamed the country’s severe economic problems on the “criminal dollar,” no Venezuelan receives his or her salary in greenbacks.

An uncertain amount of dollars and other foreign currency are in circulation despite the continued lack of clarity on their legal status, with people now letting down their guard and spending unofficial currency more openly after Maduro appeared to give his blessing for its use.

Although the exchange of the greenback still is not permitted under any law or order published in Venezuela’s Official Gazette, several experts have reported that between 56 percent and 59 percent of transactions at commercial establishments are made in dollars.

Venezuelans mainly secure access to the coveted US currency through remittances from family members living abroad, although unlike in other countries they typically receive the money in cash through a compatriot who has returned from foreign travel.

Transactions in virtually worthless bolivars are inevitably carried out via debit or credit card in Venezuela, since people would have to lug paper money around in bags or sacks to make full cash purchases in that currency.

Bolivar-denominated bank notes, however, still have a use in stores. Since nearly all dollars in circulation are in the form of $10, $20, $50 and $100 bills, the local currency must be used as a kind of pocket change to complete transactions.

Due to the legal uncertainty surrounding currency issues, it is impossible to precisely state the amount of dollars in circulation in Venezuela, but reports from economic analysis firms indicate it ranges from between $650 million and $800 million.

That estimate takes in account both business transactions and securities issued in foreign currency by the private sector, which was allowed to raise money this way under a new rule this year by the National Securities Agency. EFE-EPA


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