The Price of Hard Currency Drops on the Black Market in Cuba

Until last week, the price of hard currency on the black market was on the rise. (14ymedio)

14ymedio bigger14ymedio, Havana, 25 May 2022 — The price of hard currency in Cuba is plummeting on the informal market. Not only has the freely convertible currency (MLC) fallen, but also the dollar and even the euro.

“Last week the MLC rate was 125 pesos, but I could only sell at 10 to 110 pesos to a family member,” says Niurka, a Havanan from El Vedado, who receives remittances and suffers first-hand from the fall of the freely convertible currency, which de facto replaced the Cuban convertible peso (CUC) after its disappearance, dictated by the so-called Ordering Task*. “I can’t explain it to you. I can spend 1,100 [Cuban] pesos in one moment in the agro market now,” she complains.

Like so many other Cubans, Niurka usually changes much of what she receives into Cuban pesos. “In the MLC stores you don’t buy everything you need. Yes, chicken, tomato puree, some olive oil, a condiment or a jam, but I buy the rest on the street, in CUP: meats, vegetables, rice, beans… Not to mention the daily expenses, electricity, gas, the telephone,” she explains.

According to the figures published daily by the independent media outlet El Toque, the black-market exchange rates are 110 Cuban pesos (CUP) per MLC, 100 per dollar and 115 per euro. The drop is substantial compared to what was quoted last week: about 125 pesos per MLC, 115 pesos per dollar and almost 130 pesos per euro.

Until then, the price for hard currency was on the rise, due to growing demand, on one hand because of the need to buy products in MLC stores that are not found in the peso stores, and, on the other, because of the need for dollars for those who want to emigrate.

The turning point came on May 14, when the Cuban Minister of Economy, Alejandro Gil Fernández, declared that a “special” exchange rate would be established for some producers, state and private, of high-demand goods. He didn’t give details except to say that it would be between the official rate of 24 pesos and that of the informal market, which in those days was reaching 125 pesos.

The measure immediately aroused criticism from experts, such as economist Pedro Monreal, who called it “one more nail in the coffin of the ’ordering task’ and a possible source of illegality.” In any case, the collapse of the MLC this week seems to be a direct consequence of those statements.

Another factor that influenced the fall in currencies is the new measures announced by the Biden Administration last week on May 16, which include the elimination of the $1,000 per quarter/per person limit on remittances.

This restriction had been in force since 2019, when it was promulgated by then-US President Donald Trump along with other provisions that largely paralyzed the official business of foreign exchange, such as the prohibition on doing business with the Cuban military. This was the case of Fincimex, blacklisted by the US Treasury in June 2020, which managed remittances up to that time.

Remittance services, such as Cubamax or VaCuba, two of the most used, haven’t yet received official communication to eliminate the limit of $1,000 every three months, but Biden’s mere announcement seems to have had an effect on the informal foreign exchange market.

“Something is happening in Cuba with the MLCs,” says Jonathan, who emigrated to the United States last year. “The muchacho I use to send remittances to my family, for the first time in almost a year doesn’t have MLC there to pass on to them.” And not only freely convertible currency, which only works if deposited on a Cuban magnetic card, but also dollars, euros or even national currency.

Jonathan says that just a week ago, he was able to send money without a problem in this unofficial way, but it turns out “that yesterday I wrote him and he says that he has no MLC or anything. That things are bad right now. I asked him when he was going to have it and so far he hasn’t answered me.”

*Translator’s note: Tarea ordenamiento = the [so-called] ‘Ordering Task’ is a collection of measures that include eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency which must be in the form of specially issued pre-paid debit cards, and many other measures related to the Cuban economy. 

Translated by Regina Anavy


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