Why is the Venezuelan Petro stable despite the collapse of oil?

Venezuela depends almost exclusively on oil exports. And Nicolas Maduro's government is increasingly pushing its official cryptocurrency, an oil-backed stablecoin, as a strategy to support the Venezuelan economy.

How does the drop in oil prices affect the Venezuelan petro?

Earlier this week, virtually any world economy market woke up with serious losses. West Texas International (the base oil price in the United States) went from nearly $ 46 (the price per barrel of oil) to a low of $ 27.5.

Brent (the European reference) dropped from $ 50 to $ 30 in the blink of an eye. The main commodities in the world – apart from gold – and even the stock markets have collapsed due to the panic over the spread of the deadly coronavirus and a trade war between Russia and OPEC led by Saudi Arabia.

But in Venezuela, petro seems to be unaffected: its price moves independently of the markets that support it. Why?

A not so stable stablecoin

First, let's take a look at the official price. The government's Petro Calculator portrays a rock solid token. But an official price of almost $ 60 per coin demonstrates a serious discrepancy with the reality of the markets: a barrel of oil costs almost half.

This value is equally questionable even considering the performance of the rest of the products that presumably form part of the basket of goods that determine the price of a petro. In truth, however, the figure derived from this calculation is the least important of all in determining the real price of the petro, since no one outside the government uses it anymore.

The price of petro on the secondary market has always been much lower and much more volatile, despite claims by the Venezuelan government that petro is a full-fledged stablecoin.

On the Amberes regional trading platform, the petro / euro pair shows a drop of only 2 euros during the crisis on Monday, from 32 € to just over 30 € per token, a value that had already been tested several times during the year.

The petro / Bitcoin pair (the most liquid pair on the platform), on the other hand, shows a drop from 0.025 BTC per token to 0.024. On Criptolago, another state-sanctioned cryptocurrency exchange, the reality is just as strange.

On the spot trading platform, the petro has a value of 0.007 BTC (close to $ 54). But on the trading board of the peer-to-peer site, the price of the petro is around 0.0025 BTC (about $ 19).

Similarly, on the Cryptia exchange, the petro is quoted at 0.0046 BTC (about $ 36), although the volume of trades on this platform is close to zero. In reality, it therefore appears that traders do not treat petro like a stablecoin, quite the opposite.

And nobody sticks to the official government price. In fact, it appears that each trading pair behaves completely differently and isolated from any real market value.