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Venezuela's central bank has begun negotiations with Deutsche Bank AG to carry out gold swaps to improve the liquidity of its foreign reserves as it faces heavy debt payments this year, according to two sources familiar with the talks, as reported by Reuters.
Low oil prices and a decaying state-led economic model have weakened the OPEC nation's currency reserves and spurred concerns that it could default on bonds as it struggles to pay $9.5 billion in debt service costs this year, Reuters wrote.
Around 64% of Venezuela's $15.4 billion in foreign reserves are held in gold bars, which limits President Nicolas Maduro's government's ability to quickly mobilize hard currency for imports or debt service.
In December, Deutsche and Venezuela's central bank agreed to finalize a gold swap this year, the sources said. The sources did not confirm the volume of the operation in discussion. Neither Deutsche nor the central bank responded to requests for comment.