In Venezuela, the bolivar supported by billions of dollars

A street vendor with Bolivars in hand in Caracas, Venezuela.

AP - Ariana Cubillos

Text by: RFI Follow

2 mins

Soaring oil prices are a delight for exporting countries.

Thanks to the revenues from the black gold, the Venezuelan Central Bank was able to stabilize the bolivar.

Long plagued by hyperinflation, the national currency would appreciate again. 

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Without revealing the amounts, the Central Bank of Venezuela recognizes 29 interventions on the exchange rate since October 2021, the date of the monetary conversion.

The country's authorities then removed six zeros from the bolivar, 1 million old bolivars becoming 1 new bolivar, recalls 

, from RFI's Economy department.

According to estimates by Aristimuno Herrera & Asociados, the government would have supported the national currency with billions of dollars.

2.2 billion dollars have thus been injected into the market over the past five months to increase the supply of greenbacks.

“

,” César Aristimuño told AFP.

At the same time, Caracas introduced a 3% tax on foreign exchange and cryptocurrency transactions.

“

,” Venezuelan Vice-President Delcy Rodriguez, also Minister of Economy, insisted on Tuesday.

Since October, the official dollar rate has fallen from 4.18 to 4.34 bolivars, an almost negligible depreciation of 3.69% after reaching 76% in 2021 until the conversion and more than 95% in 2018, 2019 and 2020.

But, as noted by Henkel Garcia, director of the Econometrica consultancy, this policy of injecting dollars is only possible because of the " 

" size of the economy, with a gross domestic product which has fallen by more than 80% between 2013 and 2020. It rebounded, according to the government, to 4% in 2021. “

” this policy of injecting dollars, he underlines.

►Also read: Venezuela: hyperinflation slows down but still affects daily life

Banned for 15 years by the Venezuelan government, the dollar was once highly prized, trading on the black market at a price well above the official exchange rate.

But faced with widespread shortages, crippling hyperinflation and a sluggish economy, the government was forced to lift the ban in 2019.

By circulating more dollars, the Central Bank has succeeded in stabilizing the exchange rate, experts believe.

However, inflation remains very high: last year, it reached 686%, a far cry from 130,000% in 2018, 9,585% in 2019 or 3,000% in 2020.

Some experts accuse the government of burning precious international reserves.

They now amount to nearly 11 billion dollars, less than half of the reserves available in 2014.

►Also read: 

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• Economy