Politics
The Demise of the Venezuelan Bolívar Continues [Chart]
![The Demise of the Venezuelan Bolívar Continues [Chart]](https://www.visualcapitalist.com/wp-content/uploads/2015/05/venezuela-russia-oil-chart.png)
The Demise of the Venezuelan Bolívar Continues [Chart]
The Chart of the Week is a weekly feature in Visual Capitalist on Fridays.
When the price of oil got crushed in mid-2014, there was no doubt that economies heavily reliant on oil exports would feel a pinch. Russia and Venezuela are no exception, and their currencies have been some of the most interesting stories emerging from this new oil price reality.
Russia’s ruble had declined almost 40% against the US dollar over the next six months, only to rebound at the beginning of 2015 along with the price of Brent. Venezuela, which needs to sell oil at $89 to breakeven on their budget, has also seen their currency flop. However, the circumstances are very different.
While the Russian ruble was able to rebound somewhat, the Venezuelan bolívar has continued to depreciate to close to 80% against the USD since the oil price went down the tubes. This is only part of an even bigger decline since Nicolas Maduro took office two years ago, and the oil price isn’t the only thing to blame. The country’s draconian capital flight controls, waning foreign currency reserves, and money printing are also factors.
Of course, news of the struggling bolívar isn’t based on the official information from the Venezuelan government – it comes from the black market rates that citizens pay in a nearby Colombian border town for dollars. The government is currently working to shut down the widely followed website that publishes these rates, known as DolarToday.
In the past two weeks, the decimation of the Venezuelan bolívar has gained even more momentum. It now costs around 400 bolívars to buy $1, when it took about 300 on May 14th. The largest currency note in the country is a 100-bolívar bill, and it is now worth around a mere quarter in US terms. When hyperinflation gains any traction, it can be extremely hard to stop.
International companies are beginning to no longer accepting bolívars. Ford announced that it will only accept USD in Venezuela, and American Airlines only allows customers to buy online with dollars.
DolarToday estimates inflation for bolívars at 68.5%, but other calculations have implied inflation as high as 510%.
Economy
The Bloc Effect: International Trade with Geopolitical Allies on the Rise
Rising geopolitical tensions are shaping the future of international trade, but what is the effect on trading among G7 and BRICS countries?
The Bloc Effect: International Trade with Allies on the Rise
International trade has become increasingly fragmented over the last five years as countries have shifted to trading more with their geopolitical allies.
This graphic from The Hinrich Foundation, the first in a three-part series covering the future of trade, provides visual context to the growing divide in trade in G7 and pre-expansion BRICS countries, which are used as proxies for geopolitical blocs.
Trade Shifts in G7 and BRICS Countries
This analysis uses IMF data to examine differences in shares of exports within and between trading blocs from 2018 to 2023. For example, we looked at the percentage of China’s exports with other BRICS members as well as with G7 members to see how these proportions shifted in percentage points (pp) over time.
Countries traded nearly $270 billion more with allies in 2023 compared to 2018. This shift came at the expense of trade with rival blocs, which saw a decline of $314 billion.
Country Change in Exports Within Bloc (pp) Change in Exports With Other Bloc (pp)
🇮🇳 India 0.0 3.9
🇷🇺 Russia 0.7 -3.8
🇮🇹 Italy 0.8 -0.7
🇨🇦 Canada 0.9 -0.7
🇫🇷 France 1.0 -1.1
🇪🇺 EU 1.1 -1.5
🇩🇪 Germany 1.4 -2.1
🇿🇦 South Africa 1.5 1.5
🇺🇸 U.S. 1.6 -0.4
🇯🇵 Japan 2.0 -1.7
🇨🇳 China 2.1 -5.2
🇧🇷 Brazil 3.7 -3.3
🇬🇧 UK 10.2 0.5
All shifts reported are in percentage points. For example, the EU saw its share of exports to G7 countries rise from 74.3% in 2018 to 75.4% in 2023, which equates to a 1.1 percentage point increase.
The UK saw the largest uptick in trading with other countries within the G7 (+10.2 percentage points), namely the EU, as the post-Brexit trade slump to the region recovered.
Meanwhile, the U.S.-China trade dispute caused China’s share of exports to the G7 to fall by 5.2 percentage points from 2018 to 2023, the largest decline in our sample set. In fact, partly as a result of the conflict, the U.S. has by far the highest number of harmful tariffs in place.
The Russia-Ukraine War and ensuing sanctions by the West contributed to Russia’s share of exports to the G7 falling by 3.8 percentage points over the same timeframe.
India, South Africa, and the UK bucked the trend and continued to witness advances in exports with the opposing bloc.
Average Trade Shifts of G7 and BRICS Blocs
Though results varied significantly on a country-by-country basis, the broader trend towards favoring geopolitical allies in international trade is clear.
Bloc Change in Exports Within Bloc (pp) Change in Exports With Other Bloc (pp)
Average 2.1 -1.1
BRICS 1.6 -1.4
G7 incl. EU 2.4 -1.0
Overall, BRICS countries saw a larger shift away from exports with the other bloc, while for G7 countries the shift within their own bloc was more pronounced. This implies that though BRICS countries are trading less with the G7, they are relying more on trade partners outside their bloc to make up for the lost G7 share.
A Global Shift in International Trade and Geopolitical Proximity
The movement towards strengthening trade relations based on geopolitical proximity is a global trend.
The United Nations categorizes countries along a scale of geopolitical proximity based on UN voting records.
According to the organization’s analysis, international trade between geopolitically close countries rose from the first quarter of 2022 (when Russia first invaded Ukraine) to the third quarter of 2023 by over 6%. Conversely, trade with geopolitically distant countries declined.
The second piece in this series will explore China’s gradual move away from using the U.S. dollar in trade settlements.
Visit the Hinrich Foundation to learn more about the future of geopolitical trade
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