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Venezuela to End US Dollar-Denominated Oil Deals, Currency Exchanges

Puebla, MX (VNA– The Venezuelan government moved this week to phase out the use of US dollars in oil deals and official currency exchanges.

The Venezuelan government moved this week to phase out the use of US dollars in oil deals and official currency exchanges.

President Nicolas Maduro’s government has ordered oil traders to use other international currencies such as the euro in any crude oil deals, the Wall Street Journal reported on Wednesday. According to the report, the government has ordered traders to halt all payments denominated in US dollars, while state oil firm PDVSA has asked joint venture partners to convert existing holdings to euros. The claims were based on interviews with unnamed government officials, according to the Wall Street Journal. The Maduro administration hasn’t publicly announced such a decision, though in recent weeks top government officials have argued the country should move away from the dollar.

Related: Venezuela Investigates Opposition Figure Over Crates Of Cash

“The market is dominated by transactions with the US dollar, and we must develop other ways to conduct international transactions,” Finance Minister Ramon Lobo told state broadcaster VTV over the weekend.

“We must resort to other convertible currencies: the euro, the [Chinese] yuan, the pound sterling,” he said.

Then on Thursday, Lobo announced the government’s foreign currency auctions will start offering buyers currencies such as the euro and Russian rouble.

“We are making the technical and technological adjustments … so that Dicom, which is our main space for auctioning currencies, develops towards [currencies] other than the dollar,” he told teleSUR.

The announcement was made amid reports the government’s main currency auction system, Dicom, had abruptly stopped selling dollars. Lobo confirmed the auction house had been closed, but said it will restart operations soon.

“Once the technological adjustments are completed and authorized exchange traders are able to exchange in the currencies we are going to work with, we will open the Dicom again – but not in dollars, but in other currencies,” he said.

US Dollar
Image: Pixabay

Dicom has so far auctioned around US$72 million in foreign currency since starting operations three months ago. Business groups and the opposition have complained this amount doesn’t cover demand, pushing Venezuelans to the flourishing currency black market. The Maduro administration has argued it is the target of a US-led “economic war”.

The government’s push to move away from the dollar follows new US sanctions barring all dealings in Venezuelan state debt and equity.

“It also prohibits dealings in certain existing bonds owned by the Venezuelan public sector, as well as dividend payments to the government of Venezuela,” the White House has stated.

Related: US Has Budgeted $49M For Venezuelan Right-Wing Since 2009

The White House said its sanctions were “calibrated to deny the Maduro dictatorship a critical source of financing” while allowing for some humanitarian exceptions.

The restrictions are the fifth round of US sanctions on Venezuela this year, though previous measures were largely aimed at senior government officials.

This post was written by Ryan Mallett-Outtrim and was originally published by Venezuela Analysis.