The government of Venezuela has formally ended its acceptance of US dollars as payments for its crude oil exports in mid-September 2017. The government has told its oil traders that it will no longer accept or send payments in dollars in order to avoid the sanctions recently imposed by the US.
Based on a report by the Wall Street Journal, oil traders who export crude from or import oil products into Venezuela have already started to convert their invoices into euros. The state oil firm Petróleos de Venezuela SA (PdVSA) has also informed its private joint venture partners that they should open accounts in euros and convert existing cash holdings into the currency.
According to Venezuelan Vice President Tareck El Aissami, the move is aimed at fighting the economic sanctions imposed against their government. El Aissami was also blacklisted by the US.
“To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar”.
Brief background of the Venezuelan decision
The US government has imposed sanctions against Venezuelan President Nicolas Maduro and other officials following the alleged “sham” election in the South American country, which saw Maduro and his party claiming a dominant victory.
Based on a report by Reuters, Maduro has announced that the country is eyeing to “free” itself from the US dollar in order to circumvent the sanctions. During his long speech to the new legislative “superbody,” he further hinted that his government favors the Chinese yuan over other 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. If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro.”