The Rise of Dollar Deposits in Venezuela

The Rise of Dollar Deposits in Venezuela

Total foreign currency deposits of Venezuelan banks ended 2022 at 26.559 billion bolivars and represented 57.45 % of the system’s public deposits, which closed at 46.233 billion bolivars.

The Rise of Dollar Deposits in Venezuela: How a 400% Increase in Dollarization Is Impacting the Economy

Compared to November, the total balance of foreign currency accounts (Convenio 20 + Free Convertibility accounts) rose 57.97 %, as a result of the strong depreciation of the bolivar in the last month of last year, when the official exchange rate climbed 50 %.

With this increase, the dollarization of bank deposits reached a higher proportion in 2022 than that reported in 2021, when, at the end of the year, the foreign currency component in deposits fell to 52.38 %.

Foreign Currency Deposits in the Banking System Close at 1.5 Billion Dollars

At the official value reported by the Central Bank of Venezuela, the Banking System closed with 1.518 billion dollars deposited in foreign currency, against total deposits in bolivars equivalent to 2.643 billion official dollars, according to the Banking Report of Aristimuño Herrera & Asociados.

In the last reported year, foreign currency deposits rose 407.7% in 2022, a figure that indicates a slowdown compared to the 477.3% rise they reported in 2021. On the other hand, total deposits increased 362.96% in the past year, evidencing that the foreign currency component gained more space with a higher increase.

This process was affected, however, after the entry into force of the Tax on Large Financial Transactions (IGTF), applied to foreign currency operations, which caused a setback in the proportion of dollars in this liability of the system, but the devaluation recorded in the second half of the year generated a new upward trend in this component.

The most popular frequently asked questions about dollar deposits

  1. What is a dollar deposit?
    A dollar deposit is a small amount of money placed into an account to start building savings. It can be used as a down payment or a way to start investing. It’s a great way to get started on the path to financial security.
  2. What are the 3 types of deposits?
    Three types of deposits are demand, savings and time. Demand deposits are available for withdrawal on demand, savings deposits earn interest and time deposits require a specific maturity date.
  3. How do you calculate dollar time deposits?
    Calculating dollar time deposits is easy; just multiply the principal amount by the interest rate and the number of years, then divide by the number of compounding periods.
  4. Which deposit type is best?
    It depends on your needs. Do you need quick access to funds? Are you looking for a higher rate of return? Talk to your financial advisor to determine which deposit type is best for you.
  5. How much does it cost to open a dollar account?
    Opening a dollar account usually involves minimal initial costs and low minimum balance requirements, making it a great option for those looking to save without breaking the bank.
  6. How much is the initial deposit for a dollar account?
    The initial deposit for a dollar account varies but usually starts at $25. Banks may require a higher minimum deposit, so it is important to check before opening an account.
  7. Can I withdraw dollars from my dollar account?
    Yes, you can withdraw dollars from your dollar account. Just make sure you have enough money in your account and use the right methods to withdraw it safely and securely.