Venezuela uses Chi­nese yuan to shun US dol­lar

A weekly Oil Min­istry bul­letin pub­lished on Friday listed Septem­ber prices in yuan, while in­clud­ing prices from pre­vi­ous weeks and months in dol­lars.

The Sunday Guardian - - & Comment Analysis - REUTERS

Venezuela pub­lished the price of its oil and fuel in Chi­nese cur­rency on Friday in what it called an ef­fort to free the so­cial­ist-run coun­try from the “tyranny of the dol­lar,” echo­ing a plan re­cently an­nounced by Pres­i­dent Ni­co­las Maduro.

Maduro last week said his govern­ment would shun the dol­lar af­ter the United States an­nounced sanc­tions that blocked cer­tain fi­nan­cial deal­ings with Venezuela on ac­cu­sa­tions that the rul­ing So­cial­ist Party is un­der­min­ing democ­racy.

The global oil in­dus­try over­whelm­ingly uses the dol­lar for pric­ing of prod­ucts.

A weekly Oil Min­istry bul­letin pub­lished on Friday listed Septem­ber prices in yuan, while in­clud­ing prices from pre­vi­ous weeks and months in dol­lars.

“This for­mat is the re­sult of the an­nounce­ment made on Sept 7 by the pres­i­dent ... that Venezuela will im­ple­ment new strate­gies to free the coun­try from the tyranny of the dol­lar,” the min­istry wrote in a state­ment re­leased af­ter the bul­letin.

Venezuela’s yuan-based

Venezuela’s Di­com cur­rency sys­tem on Wed­nes­day tem­po­rar­ily sus­pended the sale of dol­lars in or­der to in­cor­po­rate other cur­ren­cies.

prices ap­pear to be the re­sult of mul­ti­ply­ing dol­lar prices by the dol­lar/yuan ex­change rate.

The price per bar­rel for the week end­ing Friday was 306.26 yuan, equiv­a­lent to $46.76 based on the ex­change rate listed in a foot­note. That is up from the pre­vi­ous week’s price of 300.91 yuan, or $46.15 based on the cor­re­spond­ing ex­change rate.

The min­istry did not re­spond to an email seek­ing ad­di­tional de­tails.

“No­body is chang­ing con­tracts for now,” said one oil trader con­sulted about the is­sue who asked not to be iden­ti­fied.

“Oil is a com­mod­ity that is traded al­most ex­clu­sive in dol­lars. PDVSA’s debts, for ex­am­ple, are still de­nom­i­nated in dol­lars ... and that’s how they’ll have to pay bond­hold­ers,” the trader said, re­fer­ring to the state oil com­pany.

Venezuela’s Di­com cur­rency sys­tem on Wed­nes­day tem­po­rar­ily sus­pended the sale of dol­lars in or­der to in­cor­po­rate other cur­ren­cies.

Late so­cial­ist leader Hugo Chavez dur­ing his 14-year rule re­peat­edly vowed to back away from the dol­lar, which he said was be­ing printed in­dis­crim­i­nately and was des­tined to lose its place as the world’s dom­i­nant cur­rency.

But Venezuela re­mains de­pen­dent on the green­back given that it con­ducts am­ple com­mer­cial trade with the United States both through ex­ports of oil and im­ports of U.S. food and con­sumer prod­ucts. Sanc­tions by the ad­min­is­tra­tion of Pres­i­dent Don­ald Trump blocked U.S. cit­i­zens from buy­ing new debt from Venezuela or its state oil com­pany, but did not di­rectly in­ter­rupt im­port and ex­port op­er­a­tions.

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