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Venezuela is in talks with Russia to use the Russian Ruble in mutual trade settlements, abandoning the US dollar for country-to-country transactions. The news story was reported by both Russian and Venezuelan news media outlets. The talks follow sanctions on Venezuela imposed by the United States and are seen as Venezuela trying to bypass those sanctions. Furthermore, El Petro, Venezuela’s oil-pegged cryptocurrency will become another medium of exchange for the country.
The Petro is pegged to the value of a Venezuelan oil barrel and the national currency, the bolivar, is pegged to the Petro. Venezuela’s representative to the UN, Jorge Valero, was talking to the Russian media outlet Russia Today where he revealed his government’s plans for the Petro and the Ruble. He said that his government is working with the Russian government to seize opportunities to replace the US dollar in trade deals between the two countries.
The report by RT states:
“The diplomat stressed that the US penalties against the Venezuelan oil sector, along with freezing its dollar accounts, has had an enormous negative impact on the country’s economy. The measures deprived the Latin American nation of free access to international financial support and investments in its oil sector.”
According to the report, Venezuela hopes to avoid US sanctions by removing its dependency on the US dollar for inter-country trade. The Petro is an integral part of their plan to do so. The Petro has drawn some criticism of itself since its launch back in 2018. It first drew criticism by the crypto community for lacking global exposure and despite Venezuela’s claims that it was purposed to help the ailing economy. Furthermore, some also questioned whether the Petro was pegged to the Venezuelan oil at all. Back in 2018, the US government banned US citizens from purchasing or selling the Petro.
With the current economic collapse that Venezuela is going through combined with the presidential crisis and political turmoil, Venezuela is hurting financially. The sanctions imposed by the US do not help Venezuela’s efforts to revive its economy. Valero hoped for Russia’s help in Venezuela’s foreign debt. Using the Petro and the Russian Ruble helps them achieve this goal.
With the tensions rising between Iran and the US, Iran is also having talks with Russia to use their Ruble in country-to-country trade. Which means the Russian Ruble could become a possible competitor to the US dollar in the international market soon, although its chances of success are very low.