Venezuela will no longer accept oil payments in U.S. dollars, in an act widely seen as a retaliation against the United States, The Wall Street Journal has revealed.
According to the report, oil traders exporting Venezuelan crude or import oil products into the country will be required to convert their invoices to euros. Meanwhile, sources close to the state oil company Petróleos de Venezuela SA, known as PdVSA, have revealed they will open accounts in euros and begin converting existing cash holdings into euros as well.
The measure is seen as an act of retaliation against the United States, following sanctions imposed by President Donald Trump last month banning Americans from dealing in Venezuelan government debt or that of its state-run oil company.
On Thursday, Venezuelan dictator Nicolas Maduro announced he would seek to “liberate” Venezuela from the U.S. dollar by using the weakest of two official foreign exchange regimes and a basket of currencies.
“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said during a lengthy address to his new legislative super body. “If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee.”
“This is the fight against the economic blockade of the imperial sanctions of (U.S. President Donald) Trump,” he continued.
The economic crisis in Venezuela has now reached a breaking point, with millions of people living in abject poverty as a result of skyrocketing rates of inflation that have left the country with chronic shortages of food, medicine, electricity, and sanitary products.
Although the country is using an “official” exchange rate where one dollar buys 3,345 bolivars, the black market rate is currently around 20,193 bolivars per dollar, as a result of years of skyrocketing inflation. Despite three minimum wage hikes over the course of 2017, the country’s monthly minimum wage of 97,500 bolivars is now equivalent to under $4.50 a month.
This week, the Venezuelan government ran an advertisement in The New York Times accusing the White House of “imposing severe and unfair sanctions” that will affect their “economy and means to obtain resources for food, healthcare, and production.”