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Sources told Reuters that Venezuelan companies that hold U.S. dollars to prevent hyperinflation paid as much as 7% of the cost of transferring these funds overseas.
Six people familiar with the matter told Reuters that Venezuelan companies holding cash in U.S. dollars to protect themselves from hyperinflation have begun paying up to 7% to transfer these funds to overseas bank accounts.
Since 2020, the country’s banks have allowed companies to store U.S. dollars in vaults, providing a refuge for 3100% of inflation that destroyed the Bolivar currency. No interest is paid on the account.
Sources said that since this year, banks and financial intermediaries have begun to provide a service to convert cash into deposits in foreign bank accounts, with transaction costs ranging from 4% to 7% of the transferred amount.
This is another sign of the continued development of impromptu dollarization after more than 15 years of socialist economic control. This is a change that has taken place under the impetus of US sanctions, which have largely removed Venezuela from the global financial system Separated out.
The sanctions bar does business with the government and state-owned companies, but does not prevent transactions with private Venezuelan companies.
One of the sources said: “When the dollarization of the banking system is not complete, you need to find a way to make the company run.”
The source said the service allows companies in the retail, technology and pharmaceutical sectors to make payments to creditors and providers abroad, who did not want to be named.
The source declined to disclose the banks and companies that conduct business or the foreign institutions that make deposits, and pointed out that international banks have imposed strict restrictions on the flow of Venezuelan funds.
The Ministry of Information, the Central Bank and Bank Supervisor Sudban did not respond to requests for comment.
This unusual service emerged after the US sanctions against the Central Bank of Venezuela, and many foreign banks have stopped “correspondent banking” services that normally require cross-border fund transfers.
Venezuelans are also increasingly using U.S. dollar and euro cash for daily transactions.
According to data from the consulting firm Ecoanalitica, as of March, 56% of transactions were conducted using U.S. dollar or euro bills. The company estimates that the total cash circulating in the Venezuelan economy is $2.3 billion.
After US President Venezuela’s National Petroleum Corporation (PDVSA) was sanctioned in early 2019, President Nicolas Maduro eased restrictions in 2019, cutting off cash flow to the government. Washington labeled Maduro as a dictator, who manipulated his 2018 re-election.
Maduro, who accused the United States of trying to launch a coup, regarded dollarization as an “escape valve” for Venezuelans suffering from economic crisis. Although Venezuela’s economic recession had already begun before Washington approved PDVSA, he still blamed the sanctions on the sanctions. Sanctions.
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