Venezuela wants trading to be done in petro to get around debilitating hyperinflation
Much has been made of Venezuela’s economy. Compounding the situation even further, the country’s hyperinflation is reported to fall below the 1million percent initially anticipated to 1.37m percent this year.
Not that long ago, Venezuela is one of Latin America’s wealthiest countries. A large portion of Venezuela’s past fortunes can be chalked up to its vast oil reserves and geopolitical strains that swung in favour of its economy.
However, Venezuela is too import dependent and it doesn’t produce anything else but oil. As a result, the Venezuelan currency, Bolivar has been ailing for years. Venezuela has had a big hole in its pocket burned by foul importers who contrived inflated goods to get American dollars at low exchange rates.
In large measure, this has upset Venezuela’s currency stability and now the economy has plummeted into the worst inflation crisis it hasn’t been able to get out of.
Every day, one out of ten Venezuelans is fleeing the country.
Following its tumultuous history, there is widespread anxiety among Venezuelans on the ground. Every day, one out of ten Venezuelans is fleeing the country, getting out any way they can simply because the country hasn’t been able to import the goods it needs to cater to the country’s 32 million population.
This, however has been met with inhospitable actions from neighbouring countries. Ecuador and Peru recently announced they will introduce tighter migration rules. Meanwhile, the hundreds of Venezuelans who fled to Brazil confronted violent opposition from locals. Consequently, this leaves many Venezuelans to live in fear of being stranded, hungry and deprived of proper medical care. Without adequate basic goods and medicine, life has just been really tough for most Venezuelans.
To get the economy out of its tailspin, Venezuela is attempting a recovery plan with cryptocurrency. After devaluing its currency to mitigate the crisis, Venezuela goes one further in trying to combat rampant inflation with the Initial Coin Offering of petro.
Petro is backed by estimated 5.3 billion barrels of oil reserves near Atapirire in a bloc known as Ayacucho 1. However, the figure was published without any sound basis. Many experts argued the lack of proper infrastructure to get it out of the ground. Yes, all of that oil still lies deep underground.
Venezuela’s leftist President, Nicolas Maduro, provided some assurance over petro, fixing petro’s value to the price of one barrel of Venezuelan oil. Introduced in February, Maduro was optimistic petro is the answer to chart Venezuela’s recovery and promised to back it with crude reserves located in a 380-square-kilometer area (147 square miles) around Atapirire.
Despite boasting one of the largest oil reserves, Venezuela resents the U.S for contributing to its economic downturn—preferring Colombian oil over theirs. The U.S market, the largest oil producer will continue to elude Venezuela. In March, U.S. President Donald Trump banned Americans from buying or using the petro. Further, doubts that persist concerning Maduro’s claims that the petro has already brought in billions in hard currency seem to discourage the sale of petro.
Petro is backed by estimated 5.3 billion barrels of oil reserves near Atapirire in a bloc known as Ayacucho 1.
In the latest news, Bitcoinist recently reported that petro was set for a rebranding and release in November citing President Nicolas Maduro October 2nd announcement. In another development, Maduro’s regime also announced that it will only accept petro for passport application and extensions to increase reliance on the currency.
Posting its largest ever trading volumes, recent transactions are alluding to the fact that Venezuelans see petro as a way to bypass rampant hyperinflation. However, petro’s identity problems and the economic value Atapirire can create, regardless how much petro has been claimed to raise are perpetually in doubt.
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