In what amounts to the biggest blow yet to the U.S. economy, Venezuelan President Nicolas Maduro said last week that his country will be looking to disengage itself from dependence on the U.S. dollar next week, Reuters reports.
In our omnibus webpage, Currency Wars, we have fully reported on the currency war being waged against the US economy by a group of nations led by Russia, China and Iran, with the aaim of replacing the $US as global reserve currency. According to the report Maduro will look to use the weakest of two official foreign exchange regimes (the mechanisms by which nations manage their sovereign currency in relation to other currencies and the foreign exchange market).
According to Reuters, Maduro was referring to Venezuela’s current official exchange rate, known as DICOM, in which the dollar can be exchanged for 3,345 bolivars. At the strongest official rate, one dollar buys only 10 bolivars, which may be one of the reasons why Maduro wants to opt for some of the weaker exchange rates.
“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a far reaching address to Venezuela's new legislative superbody. According to reports in national media he did not supply details of how his government proposed to achieve this, but with support from the BRICS bloc it should not prove difficult.
Maduro hinted that the South American country would look to using the yuan and a bundle of other currencies instead. Over the past three years Russia and China have signed bilateral agreements with many nations to settle cross border trades in the currency of the vendor, thus signalling their intent to end the era of the Petrodollar.