Venezuela’s Petro, Which Is Supposedly Pegged to the Price of Oil, Is Not Declining Despite a Crash in the Oil Market

March 11, 2020 / by Crypto.IQ

Venezuela’s Petro cryptocurrency has always been controversial, and yet another factor raising eyebrows is that the Petro has the same official exchange rate even after global oil prices collapsed, despite the fact that the Petro is supposedly pegged to the price of oil.

As deep dived in a previous article on Crypto.IQ, the price of oil crashed due to Russia leaving OPEC+, followed by Saudi Arabia retaliating by flooding the world with oil. Indeed, the price of oil has collapsed from $60 to $30 so far in 2020.

The Petro should have theoretically lost almost half of its value as well, since the Petro is primarily backed by oil and a basket of other commodities like gold and diamonds, but the official exchange rate remains at $60 per Petro, the same as it was before oil prices crashed this week.

That being said, the free market price of the Petro is a bit closer to reality, with the exchange rate varying between $54 and $19 depending on the exchange. However, it seems the free market price of the Petro has little to do with the price of oil, and free market prices did not change much this week when oil crashed.

Regardless, apparently no one outside of the government uses the Petro cryptocurrency anymore, and Venezuelans are instead choosing to use major global fiat currencies and Bitcoin (BTC).