Venezuela Ditches Dollar as US Sanctions Hit Private Sector

Venezuela is replacing the dollar with the euro or yuan, or “any tradeable currency” in its domestic business endeavors, Venezuela’s Minister of Industries and National Production, Tareck El Aissami said Tuesday.

The moves follow steps taken this month by Russia, China, India, Turkey, and Japan to strengthen their national currencies by dropping US treasury holdings and promote exports in thier own currencies.

The newest round of sanctions imposed by the United States against Venezuela is making international financial transactions impossible for both State-run and private firms, El Aissami said during a press conference with Calixto Ortega, the President of the Central Bank of Venezuela. 

International financial transactions using foreign currency were reportedly blocked, agroindustrial and pharmaceutical sectors said, showing that U.S. financial sanctions have now extended to affect both the private and public sectors.

From his personal Twitter account, El Aissami said, “We have to generate new conditions to overcome these aggressions on the part of the government of the USA, for which we have taken some actions.”

“They continue to try to impose exchange rates that do not correspond to rational economic formulas,” said El Aissami in reference to the parallel dollar exchange rate which currently sits at 160BsS per US$, in sharp comparison to the official 62BsS price.

“This will show you how far the madness of imperialism has come. It is increasingly more hostile to trade with your currency,” he said.

“There is an illegal, arbitrary ban- contrary to international law – on the dollar’s use… which even affects the transactions of (Venezuela’s) private sector- this is the fault of imperialism,” said El Aissami.

Consequently, El Aissami said, the Bolivarian System Exchange, Dicom, “will be operating in euro, yuan or any other convertible currency and will allow the foreign exchange market to use any other convertible currency.”

Over the next few months, two billion euros will be sold to the public market at a “real, non-speculative rate,” by state bodies as part of the country’s “Recovery and Economic Growth Program”, the minister said. It remains unclear if international trade deals, and vital oil contracts which fund the vast majority of Venezuela’s foreign-currency income will continue to be in US dollars or will change to other currencies. 

El Aissami also added that the government is promoting the opening of bank accounts in non-dollar currencies, such as Russian roubles or Chinese yuan, and is willing to help private firms with these steps.

Despite these difficulties put in place by US sanctions, speaking the day before, the Vice President also called on local officials to drop the use of the “economic war”, which the government have repeatedly blamed for the economic crisis in the country, to cover up their own failings.

“The excuse of the economic war doesn’t hold at all any more, we must create the conditions for our economic stability (…) and build our own destiny,” he said, in a marked shift of government economic rhetoric.