The new foreign exchange market in Cuba has caused a speculative reaction which brought the dollar to a record price on the black market, and then fell. These ups and downs “it’s crazy” say Cubans who want to acquire that currency to face the economic crisis, travel or emigrate.

“This one here is crazy because there is a lot of instability with the dollar price,” Jaqueline Reyes, a 46-year-old college student who is waiting outside the Panamanian consulate for her visa to travel, told AFP.

Earlier in the month, the US dollar hit a record price 200 Cuban pesos in the informal market, well above 120 pesos in the state exchange offices.

However, in just three weeks the currency fell on the street to 165 Cuban pesos, according to The touchan independent site that publishes a daily black market dollar price list.

The analysts’ explanation: Despite the shortage of dollars and the speculations that have pushed the price, the high value achieved by the US currency discourages buyers.

New foreign exchange market

With the intention of dismantling the black market, the government launched a formal currency market in August, setting the dollar price at 120 pesos.

For Pavel Vidal, head of the Economics Department of the Pontificia Universidad Javeriana in Colombia, there was an “overreaction of the exchange rate” in August and September, due to “the effect of expectations” due to the new price.

The exchange rate “has depreciated too much, above its long-term equilibrium value, and has now corrected that situation in October,” the expert estimates.

“The strong demand for foreign currency to emigrate and the economic crisis explain the depreciation of the peso,” says Vidal.

More than 200,000 Cubans illegally arrived in the United States in one yearthe majority fleeing the island’s worst economic crisis in nearly 30 years, caused by the pandemic and the tightening of the Washington embargo.

Most of these Cubans travel to Nicaragua, which does not require a visa, from where the journey north begins, a journey that can cost up to $ 12,000.

To get US currency “you inevitably have to go to the informal market because the state doesn’t have enough currency to meet all the demand,” says Jaqueline Reyes.

Exchange houses sell a limit of one hundred dollars per person.

queues and complaints

the official newspaper grandmother In mid-October he published an article in which he assured that a “rogue and illegal” deal has emerged around the exchange houses.

Many people have been out of these establishments since midnight “taking care of the queue and then selling that shift,” while others bring friends so that everyone buys a hundred dollars at the official rate of 120 pesos and right away. “they resell them at 160 or 170 pesos, many times to the same people in the queue who could not do the shift “.

Reyes confirms that it is next to impossible to buy dollars in exchange houses because they finish in a few hours and “the same ones who dedicate themselves to this are always formed (in the ranks).

“Unfortunately, 70% of people who emigrate must get rid of all their belongings, their homes, everything they had to build, for a whole life”, to obtain foreign currency, stresses the woman.

José Antonio Peña, a 56-year-old chef waiting for his wife outside the Mexican consulate, says the drop in the dollar price has hurt him.

“The houses collapsed, my house which cost $ 10,000, cost me (for sale) 5,000” due to the depreciation of the weight, he says concerned.

For the Cuban economist Mauricio de Miranda, the decline in the dollar is not due to a greater supply of the US bill “but to a drop in demand caused by the very high price reached” by the currency.

Cubans, especially those who travel to buy products for resale on the island, are unwilling to buy the currency at those prices because their business may “not be profitable,” the economist says.

The value of the US dollar began to skyrocket on the black market since January 2021, when the government implemented a painful financial reform and set the price at 24 pesos per unit.

After that reform “things have reached an enormous price. Today you go to bed with one price and tomorrow you wake up with another”, describes Reyes, who assures that Cuba “has never experienced such a tough economic situation” as it is now.

Source: AFP

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