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Venezuela to ban US dollar, use euro for foreign transactions

Venezuela plans to adopt the euro or other foreign currencies for future foreign exchange transactions as it looks to replace the U.S. dollar amid economic sanctions on the South American country from the United States, various media outlets reported.

According to Venezuela's Economy Vice President Tareck El Aissami, the country's Dicom exchange rate system "will be operating in euro, yuan or any other convertible currency and will allow the foreign exchange market to use any other convertible currency," RT reported.

In conjunction, El Aissami noted that Venezuelan President Nicolás Maduro ordered "a new correspondence scheme in Europe and Asia for public banks," Reuters reported.

The Venezuelan government requires all private banks in the country to participate in the Dicom bidding system, El Aissami said.

From November to December, the government will auction €2 billion offered "at a real, non-speculative rate," El Aissami added. The country would source the euros from its oil revenues, the official reportedly said.

The move is in line with economic measures implemented by the country that looks to curb hyperinflation and a long-standing recession. The measures include implementing a single exchange rate linked with the state-backed petro cryptocurrency and authorizing money exchange operations, which were previously banned.

Last year, the U.S. prohibited investors from acquiring Venezuela's newly issued debt, blocking the country's access to credit markets. Maduro reportedly said the Venezuelan government is a victim of an "economic war" waged by political opponents aided by the U.S.

The International Monetary Fund expects inflation in the country to hit 1,000,000% this year, making it one of the worst hyperinflationary crises in modern history.