Venezuela Ramps Up Money Printing, Fueling Bolivar’s Slide and USDT Surge

After a period of relative calm in Venezuela’s foreign exchange market, the central bank‘s monetary policy is once again shaking the economy. The Banco Central de Venezuela (BCV) has accelerated the printing of bolivars, sending the exchange rate back on an upward trajectory.

According to official data from the BCV, the monetary base—the amount of money in public hands—expanded by 8% during the week of January 16. The injection added 948,419 million bolivars into the national economy.

This acceleration follows a notable 6.5% contraction the previous week, when the money supply stood at 878,165 million bolivars.

The recent surge coincides with the government’s distribution of its so-called “economic war bonus.” These payments, deposited in bolivars through the Patria platform, range from the equivalent of USD 50 to USD 120 at the current exchange rate.

As liquidity has increased, the price of Tether (USDT) in bolivars on major peer-to-peer markets like Binance has also climbed. The stablecoin has jumped 15% against the Venezuelan currency in one week, rising from an average of 460 bolivars seven days ago to 530 bolivars at the time of this report.

The rise in USDT is a key inflationary signal. In Venezuela, the stablecoin issued by Tether Limited is widely used as a benchmark for the unofficial exchange rate, particularly in the informal economy. Consequently, when USDT rises, prices for goods and services tend to follow, increasing the cost of living for Venezuelans.

Expert Analysis

Economists Aarón Olmos and Daniel Peláez agree that the massive injection of bolivars, combined with a limited supply of foreign currency, is creating a highly volatile scenario for the national economy.

Olmos, a professor at the Instituto de Estudios Superiores de Administración (IESA), highlights the disconnect between the growing money supply and the country’s low productivity. “Inflation is not corrected just by lowering prices or having more dollars; inflation is fundamentally corrected with more production,” he explained.

He sees the root of the problem clearly. “Whenever we have an increase in the amount of bolivars in the economy, and that increase is not matched by productive capacity… that excess liquidity or that surplus amount of bolivars will always be a problem, because it will push prices up,” Olmos noted.

Peláez, an economist and former professor at the Universidad de Margarita, reinforced this idea, pointing out that the expansion of the money supply directly impacts market psychology. “An important point is the increase in liquidity, but that can very quickly turn into exchange rate pressure,” he said. “Especially when people feel there are more bolivars, but the same amount of dollars.”

The expansion becomes critical “when that money expansion is not accompanied by something credible,” Peláez added. “That is, by a fiscal policy or a monetary policy, or even an exchange rate policy.”

USDT as a Safe Haven

Once the new liquidity hits the system, the market seeks refuge in easily convertible digital assets. Peláez said that given the lack of access to physical foreign currency, citizens turn to stablecoins.

“Specifically in our country, USDT functions as a kind of digital dollar with immediate access, because it doesn’t respect holidays, it doesn’t respect weekends, it works 24/7, especially in P2P markets,” he stated.

This is reflected in trading volumes. The Venezuelan bolivar is the most active fiat currency on Binance’s P2P market, with over 220,000 order book updates and an offer volume exceeding $5.3 million, according to data from P2P.Army.

For Peláez, this is a matter of survival, not speculation. “A portion of those bolivars is seeking cover, that is, to protect themselves from any inflationary process.”

However, this digital refuge ultimately sets the prices on the street. Aarón Olmos noted that “the price adjustment transmission mechanisms of the USDT crypto asset seem to be much faster than other mechanisms that can affect us.”

This speed creates immediate distortions. “Without this clarity, everyone does what they see fit for their own benefit, and unfortunately that harms Venezuelans even more,” Olmos said. “The fact that the reference exchange rate for stable crypto assets continues to rise in price makes things more complicated.”

Lack of Dollars ‘Feeding the Fire’

Olmos also warned that the exchange rate gap is expanding “dangerously” and that public frustration over the lack of access to dollars through official banking channels is “feeding the fire.”

He described the current economic trajectory as worrying. “The speed of the dollar’s growth against the loss of purchasing power for Venezuelans… is pernicious, terrible for the salaries of Venezuelans.”

Stability could potentially be achieved if dollar inflows to national banks from oil deals between Venezuela and the United States continue and if monetary issuance is curbed. Such a scenario could narrow the exchange gap, similar to what occurred in early January.

For now, Venezuela’s economy remains in a precarious state. Any potential for stabilization rests on a delicate balance between oil revenues and fiscal discipline. As long as the bolivar continues to lose ground, USDT will serve not just as a store of value, but as a primary price reference in an economy defined by volatility.