Foreign credit card transactions add scarce dollars to Venezuela circulation

CARACAS, June 13 (Reuters) – Transactions paid with foreign credit cards are helping circulate more foreign currency in Venezuela, where the government has locked in an exchange rate as part of efforts to control double-digit inflation, four public sector and finance sources said.

The transactions have been growing steadily since the government of President Nicolas Maduro, who is running for reelection in July, loosened currency controls five years ago, allowing an expanded use of U.S. dollars alongside the local bolivar currency.

When Venezuelans with bank accounts abroad use foreign cards, their bank outside Venezuela sends the funds to its local intermediary bank in dollars.

“This foreign currency helps support the exchange market,” said a public sector source who asked not to be named.

About 11% of transactions at supermarkets, pharmacies and other businesses are made with international cards, up from 8%last year, local analyst Ecoanalitica said in March.

Some $60 million per month from transactions on foreign credit and debit cards is sold by local banks, according to finance industry estimates.

Buyers are often retail or industrial businesses in need of foreign currency to pay for imports.

Although the dollars circulating via foreign card transactions was less than from other sources, banking sources said the funds help ease pressure on the market.

The central bank did not respond to a request for comment, nor did the finance ministry.

In 2023, foreign exchange from international cards reached $900 million, according to banking sources.

U.S. sanctions have halted some international transfers, as the central bank and some local banks were left without partner banks that would allow them to move money in and out of Venezuela. Other banks still have partners abroad.

U.S. sanctions are largely focused on members of Maduro’s government and the oil industry and do not restrict private Venezuelan businesses from operating abroad.

Foreign cards “offer a bit of oxygen because many people can’t access bolivars,” said economist Jesus Palacios, referring to credit restrictions on bolivar-denominated credit cards.

Sign up here.

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Since 2018 Mayela has reported for Reuters on Venezuela’s economy and general news from capital Caracas. She is particularly interested in covering the effects of Venezuela’s economic crisis and high inflation, especially concerning the effects this has on the day-to-day lives of people and families. She also writes about how the country’s finances are managed, as well as Venezuela’s main industries. Before she joined Reuters Mayela worked at local media outlets.