Venezuela has closed out a tumultuous year for its economy, marked by a significant surge in the cost of buying US dollars. The official exchange rate has risen by 479% over the past 12 months, with the central bank setting the rate at 301.37 bolivars to the US dollar as of Wednesday. This drastic increase highlights the country’s ongoing struggles with hyperinflation and a lack of hard currency.
The gap between the official and black market rates has also grown substantially, nearing 100%. The black market rate, which is largely determined by crypto exchange platforms, currently stands at around 560 bolivars per US dollar, representing an 85% difference with the official rate. According to economists, approximately 80% of Venezuela’s currency exchanges take place on these platforms.
Despite President Nicolas Maduro’s projection of 9% economic growth in 2025, the country has experienced a sharp decline, characterized by soaring inflation and a shortage of hard currency. The US has intensified pressure on Maduro’s government, imposing stiff sanctions and seizing “sanctioned oil vessels” traveling to and from Venezuela. The US oil embargo, which has been in place since 2019, has forced Venezuela to export most of its oil on the black market at a discounted price.
The inflation rate is expected to exceed 500% in 2025, according to estimates from private firms, although official data has not been released since October 2024. The country’s increasing reliance on dollarization has become a coping mechanism for hyperinflation. As the situation continues to unfold, the economic challenges facing Venezuela are likely to persist, with the widening gap between the official and black market exchange rates exacerbating the country’s financial struggles. The Venezuelan government’s next steps will be crucial in addressing the economic crisis and mitigating its impact on the population.
