Venezuela is striking back at U.S. sanctions by purging the U.S currency from the South American economy and instead switching to the Euro for international transactions.
Venezuela is in its fifth year of recession, prompting the region’s largest-ever migration crisis that has overwhelmed its neighbours as Venezuelans scramble to move anywhere they can for jobs and a better lifestyle.
The Economy Vice President has pledged to see the opening of bank accounts in Europe and Asia to counteract the American financial sanctions, while adding that the country would sell around €2 million from oil revenues.
President Nicolas Maduro frequently accuses the US of seeking to sabotage his administration by sparking an economic crisis. The Venezuelan dollar hovers around 0.015 cents per American Dollar.
The United States administration and many of their Latin American allies, however, blame Venezuela’s economic meltdown on government mismanagement, reckless money printing, and poor management.
In an attempt to slow crippling hyperinflation, the Venezuelan government slashed five zeros from the Venezuelan bolivar earlier this year. But the move did little to ease economic unrest, with the International Monetary Fund forecasting inflation at 1.4 million percent this year and 10 million percent next year. In fact, Venezuela’s annual inflation hit a whopping 488,865 percent in September.
The US hit back by imposing sanctions on four key members of Venezuela’s government – First Lady Cilia Flores, Vice President Delcy Rodriguez, Communications Minister Jorge Rodriguez and Defense Minister Vladimir Padrino.
With the Venezuelan government now trading in Euros, what can you get if you have a spare 10,000 Euros, to invest?
You could buy a mansion from a Venezuelan general. Or you can buy a used car (there are no new ones) You could put it in a bank and get Sovereign Bolivar.42.000 interest monthly (Minimum wage is a little over Sovereign Bolivar..7.200 a month) which sounds like a lot of money. However, due to an inflation rate of 175% per year, your money would be worthless very quickly.
Last week, Sputnik News reported that China sold off $3 billion in US dollar bonds. In recent months, Russia, China, Japan, Turkey, Iran and Iraq have all ditched the dollar in bilateral trade with each other. Meanwhile, the European Union scrapped its use of the dollar when trading with Iran in order to circumvent US sanctions.
While Venezuela's move won't have a "massive impact on the economy," Dobson said, it is part of a larger trend of countries dropping the dollar in response to US President Donald Trump's hawkish economic policies.
A once-wealthy oil nation, Venezuela is gripped by a historic crisis deeper than the Great Depression in the United States. Many Venezuelans struggle to afford scarce food and medicine, and earn for a government that will listen to their complaints and act in their best interest.