The Dollar Reaches 200 Cuban Pesos amid Unease over the Island’s Recovery
Once again, the dollar has reached 200 Cuban pesos, a situation previously experienced last October. However, this time, analysts believe the rise reflects a different set of circumstances:
A Modern-Day Problem
Economist Pavel Vidal, a professor at Javeriana University in Cali (Colombia), points towards an “incomplete recovery after the pandemic, especially tourism, macroeconomic imbalances, such as the fiscal deficit” as the driving force behind the spike.
Furthermore, the specialist is pessimistic about the future and sees the exchange rate “potentially continuing to be above 200.”
Migration and Dollars in High Demand
Mauricio de Miranda, a tenured professor and researcher at Javeriana University, highlights another contributing factor: migration. “There is a shortage of dollars and a very high demand for dollars,” he told EFE, which has set its sights on the phenomenon.
A Short History
At the beginning of 2021, authorities announced an exchange rate of 1 dollar for 24 CUP with the introduction of the new Ordinance Task. This rate was widely criticized by economists and was soon proven to be completely out of touch with reality.
On the street, the dollar stabilized at rates close to 80 or 90 pesos, and a year later, in August 2022, the Central Bank announced a modification, settling on 120 pesos per dollar for natural persons and the retail sector.
This year’s situation differs from last October when the 200 barrier was broken for the first time, according to Vidal. He recalls an “exchange rate overreaction” during those days.
The Cuban Government’s Contradictory Measures
The government’s recent decision to once again accept dollar cash deposits in Cuban banks to retain foreign currency in the financial sector has received criticism from experts. They see this move as a contradiction to the monetary reform that sought to stop dollarization.
De Miranda said, “As long as the Cuban national market continues to offer important goods in foreign currencies, the Cuban peso is not going to recover.”
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