14ymedio/EFE, Havana, 13 June 2023 — The dollar once again reaches 200 Cuban pesos (CUP), a situation that the Island had already experienced in October 2022. This time, according to analysts, it has different characteristics.
If the previous time the dizzying rise was the result of speculation, this time it’s because of the “incomplete recovery after the pandemic, especially of tourism and macroeconomic imbalances, such as the fiscal deficit,” according to Cuban economist Pavel Vidal, a professor at the Javeriana University of Cali (Colombia).
The specialist, in addition, does not see an encouraging future and indicates that most likely the exchange rate “will continue to be above 200” in the future.
Mauricio de Miranda, full professor and researcher at the same university, adds another factor: immigration. “There is a shortage of dollars and a very high demand for them,” he told EFE, which has reported on the phenomenon.
At the beginning of 2021, with the start of the Ordering Task,* the authorities announced an exchange rate of 1 dollar for 24 CUP. That was always considered by economists as totally far from reality, and it was not long before it was proven that they were right.
On the street, the dollar took little time to reach rates close to 80 or 90 pesos, and a year later, in August 2022, the Central Bank announced a modification, going up to 120 pesos per dollar for individuals and the retail sector.
But today’s situation is different from that of last October, when the 200-peso barrier was broken for the first time, according to Vidal.
In those days, Vidal recalls, there was an “overreaction to the exchange rate.”
In a new attempt to retain foreign currency in the financial sector, the Government announced last April that, after two years, Cuban banks would again accept dollar deposits in cash.
Experts saw in that announcement a contradiction to the spirit of monetary reform that sought, precisely, the opposite: to stop dollarization.
One of those critics was de Miranda, who reminds EFE that in “the national market, the dollar continues to be the currency that solves many things.”
“As long as the Cuban national market continues to offer important goods in foreign currency, the Cuban peso will not recover,” he says.
*Translator’s note: The 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 a broad range of other measures targeted to different elements of the Cuban economy.
Translated by Regina Anavy
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