By Alex Vasquez and Nicolle Yapur / Bloomberg
Greenbacks are used for more 50% of sales in nine cities
Many Venezuelans now rely on remittances from relatives abroad
Venezuela is becoming increasingly dollarized, as greenbacks help shoppers avoid the inconvenience of the hyper-inflationary local currency.
An estimated 64% of all sales in Venezuela involve foreign currency, of which 55.7% are made in dollars, according to a survey of almost 16,000 transactions carried out from Feb. 9-14 across 10 cities by Ecoanalitica, a Caracas-based research firm. Colombian pesos and euros also are gaining in use.
In the western town of San Cristobal, about 94% of all transactions took place in foreign currencies, according to the study. In Maracaibo, where rolling blackouts have left credit card readers useless for days on end, about 92% of sales were in foreign currencies.
Over the past year, the U.S. dollar has become Venezuela’s unofficial currency. The collapse of the bolivar, which shed 99% of its value against the dollar in 2019, mirrors that of the Venezuelan economy, which is entering its sixth year of decline. While inflation has somewhat abated, it’s running at an estimated annual rate of 4,344%, according to Bloomberg’s Cafe Con Leche Index.
More than the 4 million Venezuelans who have migrated in recent years to escape the economic crisis send remittances that Ecoanalitica estimates will reach $4 billion this year. This has caused a breach in living standards between those with access to hard currency and those without.
The study also found that 81% of sales took place in cash, which is creating challenges for local businesses, since just a few banks have started offering foreign currency accounts which act more like deposit boxes.
“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.”