After months of wide disparities between the official exchange rate and the unofficial market, the decline in the price of Venezuela’s U.S. dollar tether (USDT), used as a price reference in some parts of the country’s trade, has sparked debate about its real impact on inflation.
As the exchange rate gap changes from 70% to nearly 30%, the economy There is a debate between interest rate convergence and price decline resistance.
In Venezuela, since last year, sellers, especially informal sellers, have started using USDT as a reference for valuable products and services. This is because access to cash dollars has been restricted and sites displaying unofficial prices for dollars have been removed.
That’s the reason, Recent corrections in the so-called “Binance Slate” —Referring to the price of the USDT-VES pair on the exchange’s P2P market—we tested the domestic price elasticity.
CriptoNoticias reported that the price of USDT in Venezuela has fallen by 40% in just two weeks. The average price went from 760 bolivars to just over 440 bolivars. This depreciation had a significant impact on the Caribbean country’s exchange rate.
Additionally, as of January 20, the official exchange rate (arbitrated by the Venezuelan Central Bank) is 344.51 bolivars, while the unofficial exchange rate is approximately 440 bolivars, according to market data collected by trackers on social networks.
The diagram above shows an interesting scenario. From January 2 to 20, the official exchange rate rose by 14%, while the unofficial exchange rate fell by 22%.
Lower USDT should lead to lower inflationary pressures
Venezuelan economist and university professor Aaron Olmos explains to CriptoNoticias that this dynamic has led to an exchange rate gap that peaked at up to 85% last year. significantly reduced.
For Olmos, the fact that the benchmark exchange rate for stable digital assets is depreciating This should lead to a reduction in inflationary pressures.
but, Blame the “obstinacy” of price setters.
Some merchants are resisting the idea, keeping prices high at December prices, and others boldly raising prices. There is resistance to price reductions in some areas.
Aaron Olmos, a Venezuelan economist specializing in cryptocurrencies.
This narrative is evident on social networks, where “Creole liveliness” is condemned. The lack of downward adjustment in prices marked in USDT triggered a wave of criticism. Prices rose instantly when USDT rose, but Reverse reactions are not occurring at the same rate.
“Binance’s rate has already gone down and the $100 sold cannot cover the $250 from the authorities, so (merchants) continue to sell at their own rate,” data engineer Jose Acosta said in a statement.
Professional journalist José Rafael Peña warned of widespread chaos. «The exchange rate difference went from +140% to +30%. If you have the location, you’ll fall in love with the price. “The time has come to reduce consumption until it stabilizes,” he said.
This perception is shared by nationals like Lisandro Nuñez. He asked on social networks: “What happened to the traders who were adjusting prices minute by minute after USDT on Binance?” Now that interest rates have gone down, no one will lower them.
It is still too early to measure the impact of USDT pullback on inflation
At this point, it is too early to know whether this will have a significant impact on price increases.
According to Daniel Arraez, a Venezuelan economist who specializes in digital assets, It is too early to tell whether this decline will stop inflation.
According to Mr. Arraez,
It is still too early to know whether the decline in Binance interest rates will have an impact on inflationary pressures. Because everything depends on the expectations of economic agents, that is, consumer groups, whether commercial or personal.
Daniel Arraez, Venezuelan economist specializing in Bitcoin and cryptocurrencies.
For analysts who spoke to CriptoNoticias for this report, the market is considering whether foreign exchange inflows from oil revenues are efficient. Indeed, he warns that if monetary settlement promises are not fulfilled, “the inflationary spiral will in fact intensify.”
Mr. Araez clarifies: USDT is now the reference This is because “sellers realized that if they maintained prices in USDT, they would experience less inconvenience in conducting their daily operations as a result of exchange controls.”
Looking ahead: What should users do?
Given the volatility of USDT’s bolivar price and the uncertainty of the exchange rate, experts advise caution.
Daniel Arees suggests that the decision to hold or sell digital assets is a “very personal one”. We urge you to wait until the exchange rate trend becomes clearer in the coming days.
Aaron Olmos advises consumers: Waiting for the impact of currency circulation on traditional banking operations before making any rash decisions.
“Those who have the opportunity to purchase foreign currency at official prices through traditional banks should do so for security reasons,” he advised.
The Venezuelan economy is at a tipping point, with the stable cryptocurrency USDT no longer being the engine of unstoppable upward movement, but becoming a thermometer of market distrust and resistance.
And while convergence between official and unofficial rates seems possible in the short term, the success of this process will depend on whether final consumer prices reflect the new reality. Or if inflation ends up eating away the exchange rate respite.
