(Yicai Global) Oct. 17 -- Venezuela is shutting out the American currency in favor of the euro and yuan for international and foreign exchange transactions after United States sanctions sapped its access to international capital markets.

Increasingly stringent economic and financial sanctions imposed by the US on Venezuela prevent the Latin American nation from settling in dollars, state-owned Chinese news agency Xinhua reported, citing Venezuela's Economy Vice President Tareck El Aissami.

Venezuela, which is in its fourth straight year of recession, also plans to invest EUR2 billion (USD2.3 billion) into its foreign exchange auction system over the next two months to meet demand from domestic manufacturers, the report added. It also plans to increase the reserve ratio at domestic banks to 40 percent from 31 percent in order to reduce speculative investment.

The US has been imposing tight sanctions against Venezuela since 2017, on the grounds of human rights, including restricting dollar accounts for the country's government and companies.