• 5 hours The Most Impressive Electric Vehicle Of The Year
  • 1 day Gold Miners Are Having A Stellar Second Half
  • 2 days How 3D Printing Is Turning Each And Every Industry On Its Head
  • 2 days Is The $3.5 Trillion Healthcare Industry About To Get Much More Transparent?
  • 3 days Gamblers Are Betting Big On Trump’s Impeachment
  • 3 days Even Banks Can't Answer Aramco's Trillion Dollar Question
  • 4 days Will Bezos Buy The Seattle Seahawks?
  • 4 days 6 Tech Trends Transforming The Travel Industry
  • 5 days Ousted Uber CEO Cashes Out $500 Million In Stock
  • 5 days Trump Prepares For Another Key Tariff Decision
  • 5 days The Free Money Bubble Is About To Burst
  • 6 days The Crushing Reality Of Poverty In America
  • 6 days Should You Buy Into The World’s Largest IPO?
  • 6 days The Infinite Possibilities Of Cosmic Energy
  • 7 days Analysts Link Walking To Economic Growth
  • 8 days Will Japan Turn Its Back On The Aramco IPO?
  • 9 days Global Debt Soars To $188 Trillion
  • 9 days The World's Largest Gold Miners Are Getting Creative
  • 10 days Twitter: The Saudi Spy Tool To Bring Down Dissidents
  • 10 days Broad Commodity Funds Don’t Give Enough Exposure To Gold
Cannabis Has Become A Real Estate Selling Point

Cannabis Has Become A Real Estate Selling Point

Americans spend a whopping $40…

The U.S. Doubles Down On Domestic Lithium Production

The U.S. Doubles Down On Domestic Lithium Production

Battery metals are quickly becoming…

Rio Tinto Vies To Become Top U.S. Lithium Producer

Rio Tinto Vies To Become Top U.S. Lithium Producer

Rio Tinto, the world’s No.…

Frank Knopers

Frank Knopers

Frank Knopers has studied Business Administration at the University of Twente in Enschede and obtained a Master degree in Financial Management with his research on the…

Contact Author

  1. Home
  2. Commodities
  3. Other

Troubled Venezuela Recovers Gold From Swap With Citigroup

Venezuela

The central bank of Venezuela has paid $172 million to the American bank Citigroup to recover the gold it had swapped with the bank. According to Reuters, the precious metal was previously provided by the central bank as collateral for a dollar loan.

Venezuela has used a part of its gold supply in recent years to take out dollar loans from foreign banks, but due to the new American sanctions, U.S. banks are no longer allowed to carry out these swaps. As a result, Venezuela had no other option than to end the currency swap with Citigroup and to return the gold.

The reversal of this currency swap shows that Venezuela still managed to get enough dollars to repay the loan. The country however is still in trouble, because the American sanctions made it almost impossible for companies and financial institutions in Venezuela to do business via American banks.

Crisis in Venezuela

Venezuela has ended up in a severe financial crisis due to a combination of low oil prices and a failed economic policy. The oil price has recovered to some extent, but the Latin American country is hardly benefiting from this. Due to the crisis, there was little investment in the oil industry, resulting in a decrease in oil production. This makes it even more difficult to restore the balance of payments.

Venezuela is strongly dependent on dollars for its imports, but due to the declining oil revenues, the flow of dollars became increasingly scarce. The problem was so bad that the central bank started to offer their gold as collateral to various banks, in exchange for dollar loans. The central bank made a similar deal with Deutsche Bank in order to get dollars from their gold hoard.

Due to the financial crisis in Venezuela, the gold reserves of the country declined by over 50 percent in a few years, from around 360 tonnes in 2014 to just 150 tonnes at the end of 2017. The central bank had to use part of its gold supply to pay for imported goods.

By Frank Knopers via Geotrendlines.com

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment

Leave a comment