Venezuelan President Nicolás Maduro embraced the currency of his bitter rival the United States on Sunday, calling it an “escape valve” that can help the country weather its economic crisis amid U.S. sanctions aimed at forcing him from power.
The official currency, the Bolivar, has depreciated more than 90% this year, while hyperinflation in the first nine months of the year clocked in at 4,680%, according to the central bank.
The inflationary spiral has slashed the purchasing power of Venezuela's minimum wage, which together with food assistance, is equivalent to about US$ 10 per month.
“I don’t see it as a bad thing ... this process that they call ‘dollarization,’” Maduro said in an interview broadcast on the television channel Televen.
“It can help the recovery of the country, the spread of productive forces in the country, and the economy ... Thank God it exists,” the socialist leader said.
Maduro, who at least until 2018 forbid the use of the dollar, added that while he is still evaluating transactions in U.S. currency, which have been growing in recent months, the bolivar will continue to circulate as the official currency.
Since 2003 the official exchange rate has been set by Venezuela’s central bank but the rate has become increasingly flexible.
“Venezuela will always have its currency ... we will always have the bolivar and we will recover it and we will defend it,” Maduro said in an interview with José Vicente Rangel, a leftist politician and vice president during the government of Hugo Chávez.
Under increasingly severe U.S. sanctions, the central bank has started injecting euros into the economy. The government and state oil company PDVSA have even begun to pay contractors with the European currency.
Foreign currencies enter the economy of the OPEC member largely from the sale of some shipments of crude oil and gold.
Opposition leader Juan Guaidó responded to Maduro’s dollarization comments at a news conference later Sunday, saying Maduro had admitted another defeat. “The failure in Miraflores, acknowledged today, is that the country is dollarized ... he recognizes that our currency cannot even hold value,” Guaidó said.
Recently, Caracas-based consultancy Ecoanalitica estimated 53.8% of transactions in the first 15 days of October were carried out in dollars, according to a sampling of the country’s seven main cities. That number reached 86% in the oil-rich city of Maracaibo, which has been badly hit by power cuts.