Over half of monetary transactions in Venezuela take place using dollars, and nearly two-thirds use any type of foreign currency, according to data obtained by the Caracas-based research firm Ecoanalitica.
The analysis, which studied around 16,000 transactions carried out from February 9th to 14th across ten cities in Venezuela, found that 55.7 percent of all transactions now took place in dollars, while over 64 percent of sales in foreign currency. The most popular currency after the dollar is the Colombian peso, as the neighboring country is experiencing relative economic prosperity compared to the shattered economy of Venezuela.
Credit card readers accepting Venezuela’s bolívar currency are regularly rendered useless by repeated power cuts, The most affected cities, such as San Cristobal and Maracaibo, reported usage of foreign currency as high as 94 and 92 percent, respectively.
The figures mean that despite the fierce opposition of Nicolás Maduro’s socialist regime to all things American, the U.S. dollar has effectively become the country’s unofficial currency. As well as the total collapse in value of the bolivar, which has lost well over 99.99999 percent of its value in the past decade, a major reason for this change is because four million people have fled Venezuela’s economic and humanitarian crisis over the past five years.
Many of these exiles send foreign currency back to their friends and relatives in Venezuela. Ecoanalitica estimated around $4 billion in annual remittances. That figure is highly likely to rise given the thousands of Venezuelans who continue to flee the country each day in search of economic refuge.
Currency inflation in Venezuela began to soar as early as 2007 under the rule of socialist dictator Hugo Chávez and in recent years has reached levels similar to Germany’s Weimar Republic or Robert Mugabe’s Zimbabwe, where some people were seen using a wheelbarrow to buy products and the government introduced a 100-trillion-dollar banknote.
The study also found that 81 percent of sales now take place in cash, creating problems for local businesses unable to store their money in Venezuelan bank accounts.
“I do not believe that the economy will be completely dollarized but it is showing a growing trend that is difficult to reverse,” Asdrubal Oliveros, director of Ecoanalitica, said. “We will continue to have a dual economy in which the dollar has an increasing weight.”
Another popular trend in Venezuela is the use of cryptocurrencies such as Bitcoin Cash, Litecoin, and Ethereum. Increasing numbers of businesses are accepting payments based on various blockchain technologies, although these can be problematic due to their rapidly fluctuating value.
In a bid to interfere in this market – often touted by free marketeers as the key towards a stateless, libertarian future – the socialist regime has introduced its own scam cryptocurrency known as the “petro,” supposedly backed by the country’s extensive natural resources and oil reserves. Maduro has previously claimed that the currency has received over a billion dollars’ worth of investment, although this figure is highly disputed by cryptoanalysts, many of whom question whether it has any value whatsoever.