Following the announcement of a set of economic reforms yesterday, the Maduro regime revealed today that it would move away from using the US dollars as its reserve currency, and that Venezuelan citizens must transfer any savings in USD to a “currency basket” that will include currencies like the yuan, the yen, and the ruble.
At the same time, vice president Tarek El Aissami announced that the regime’s official currency exchange system–DICOM–will not longer exchange Bolivares for US dollars, El Aissami made the announcement by simply saying, “the dollar exchange is over”.
While making the announcement, El Aissami also said:
Natural [individuals] and judicial [corporations] people must migrate their accounts to the currency basket [and] use something other than the dollar.
The dramatic shift away from the USD is likely to plunge the country’s economy into further chaos, as Venezuelans in need of the currency now have no option but to resort to the black market.
El Aissami also announced that Venezuelan banks would now be forced to open branches in China, Russia, India, and Europe in order to accommodate the presumed upcoming increase in trade with currencies from those areas of the world.
Maduro contextualized the surprise announcement by arguing that Venezuela must look to move beyond using the US dollar. He explained:
We have decided to begin a new stage of foreign trade with the use of international currencies beyond the dollar… [Venezuela must] return to a market exchange [system] that uses the gold standard and other mechanisms [to] liberate ourselves.
Maduro: Venezuela Will Move Away From USD for Oil Sales
Maduro announced that as part of Venezuela’s move away from the US dollar, the country would soon begin to sell oil and other natural resources on the international market for other currencies. Maduro made the announcement by saying:
I have decided to sell oil, [natural] gas and gold in rubles, rupees, [and] yuan, [and to] move beyond the dollar.
El Aissami also pointed out that the shift away from the dollar is part of a wider move towards Asian currencies, including the Chinese yuan. El Aissami said:
We are prepared to make the Venezuela the first country to sign the first commercial agreement in yuan for the sale of our oil to China.
Maduro: I’m OK With Becoming a Dictator
During the same televised address, Maduro said that he was hoped to be able to achieve all of the changes he wanted for Venezuela “the easy way”, but that he would achieve them “the hard way” if given no other choice.
Speaking specifically on his alleged desire to see skyrocketing prices for food and basic necessities brought under control, Maduro said:
I want to do this the easy way, but if I have to do it the hard way and become a dictator in order to guarantee prices for the people, then I will do it the hard way.
Venezuela Asks Russia for Debt Help
The Russian minister of finance, Anton Siluanov, announced today that the Venezuelan government has approached Moscow in the hopes of re-structuring the Maduro regime’s debt with the Kremlin. The move from Venezuela suggests that the country is unable to repay the approximately $8.8 billion that Russia has lent it since 2011 on schedule.
Siluanov made the announcement by saying:
Our Venezuelan colleagues have asked for a [debt] re-structure. We are working on that, both from the Paris Club [and] through bilateral mediators. I am sure that we will arrive at a solution with Venezuela that will satisfy both parties.
Short on cash and facing a hyperinflationary spiral, Venezuela has relied throughout Maduro’s tenure on foreign debt in order to fund its operations, with the majority of the money coming from Russia and China. Venezuela’s foreign debt is estimated to total $150 billion.
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