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Venezuelans turn to USDT as dollar exchange rate spikes

Venezuelans turn to USDT as dollar exchange rate spikes

GrafaGrafa2024/10/18 01:00
By:Mahathir Bayena

Venezuelans have increasingly adopted Tether’s (CRYPTO:USDT) USDT as a primary source of dollar liquidity due to rising dollar exchange rates and economic disruptions. 

While the Venezuelan government has attempted to stabilise the black market exchange rate by injecting dollars into the banking system, these efforts have seen limited success. 

The growing gap between the official exchange rate and the black market rate, which has exceeded 20% in the past month, has pushed more people to use USDT as an alternative to physical dollars. 

Stablecoins like Tether have become essential in Venezuela’s economy, especially as a savings tool. 

Due to the disparity between the official and black market rates, businesses often only accept dollars at the lower official rate, causing potential losses for users. 

This has increased demand for Tether, which has a market cap of nearly $120 billion, allowing Venezuelans to protect their savings and avoid devaluation. 

Despite injecting over $190 million in August and more than $4 billion by mid-October to slow the exchange rate rise, the government has struggled to keep the rates stable. 

With the scarcity of physical dollars in the country, Tether has played a key role in maintaining liquidity. 

According to cryptocurrency analyst Kevin Hernandez, 76% of crypto transactions in Venezuela now involve USDT, with peer-to-peer markets handling nearly $28 million in USDT monthly. 

He also noted that many remote workers receive their salaries in USDT, underscoring its growing significance in Venezuela's economy.

At the time of writing, the Tether (USDT) price was $1.00.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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