The dollar shoots against the CUC in the informal market

The dollar shoots against the CUC in the informal marketHAVANA, Jan. 7th  (14ymedio) The pressure on the exchange rate began to be noticed a few days after Raúl Castro pleaded before the Parliament for the early elimination of the monetary duality.

The fear of a sudden monetary unification and its possible effects on the foreign exchange market is contributing to the rise in the price of the dollar in informal networks in Havana. In the last two weeks, the US currency has gained between 2% and 3% on the convertible peso, going from 0.92 to 0.95 or even 0.96 CUC per dollar.

The pressure on the exchange rate began to be noticed a few days after Raúl Castro pleaded before Parliament for the early elimination of the monetary duality. The head of the State recognized that this reform “will not magically solve the accumulated problems” but if it is not resolved “it is difficult to advance correctly” in the economic reforms that the country needs. The existence of two currencies is also a headache for the state business system.

Cubans, skilled in reading between the lines, have interpreted the words of the ruler as an ultimatum for economists to implement the plan for the unification of the two currencies circulating in the country: the Cuban peso (CUP) and the convertible peso. (CUC)

Several articles published in the official press feed speculation about the closeness of a monetary reunification. The economist Ariel Terrero said last week that “the monetary and currency duality” was “the determining obstacle today for the Cuban economy to expand its wings.”

The text, published in the official newspaper of the Communist Party, Granma, fed the rumors about the vicinity of a change. The greatest fear of the population is that the process happens “overnight” and overthrows the whole scenario of the fragile domestic economy.

The uncertainty surrounding national currencies has led many to take refuge in the dollar, whose tenure was decriminalized in August 1993 and which has had a different exchange rate than that offered by the official Cajas de Cambio (Cadeca).

In the last five years, the price of the dollar has remained stable in the informal market, with slight fluctuations between 0.91 and 0.93 CUC.

The attraction of changing the US currency in the black market is that in the Cadecas the Government imposes a 10% tax and the seller only receives 0.87 CUC for each dollar. To justify this tax, the authorities shied away from the alleged difficulties in carrying out commercial transactions in that currency.

In March 2016, Foreign Minister Bruno Rodríguez assured that the tax on the US dollar would be abolished if the obstacles created by the US embargo disappeared. The news jumped to the front pages of the foreign press, but the measure never materialized.

Families that receive remittances in the US currency frequently resort to private money changers to get a better rate. Cubans also do that, since the Immigration Reform of January 2013, began to travel to Mexico, Panama or the United States to buy goods and resell them on the island.

Those who have more to lose in a devaluation of the convertible peso are those who run a private business where they charge indistinctly in CUC and in CUP or who keep their savings in convertible pesos, popularly known as chavitos.

This is the case of Victoria, who at 81 years old sold last week the Lada that belonged to her late husband. A family in the city of Trinidad paid her 13,000 CUC in cash for the car, but the old woman has not yet wanted to deposit that money in the bank, precisely for fear of the sudden unification of the coins.

“All the money I have in my house and I do not know what I’m going to do, because if they unite the currency from one day to the next I will lose instead of winning,” Victoria confesses to 14ymedio. “I thought about buying dollars but they have gone up in price and, in addition, the sellers with whom I have spoken sell small amounts, at most 1,000.”

Victoria lives with the nightmare of waking up one day with the news that the CUC has suddenly disappeared. He does not want to go through again because of what he lived in August 1961 when the government made a paper currency swap and blinked all the bills in circulation.

“For each family, only 200 Cuban pesos could be exchanged,” recalls the old woman, who along with her mother made the long line in front of the bank to obtain the new bills. “If that happens again I do not know what I’m going to do, because the money in this car is to finish what I have left of my life,” he says.

Several informal money changers consulted by this newspaper predict that the price of the dollar could continue to rise in the coming days in the black market. “There is a lot of demand and people are afraid to keep those colored paper (CUC) in their hands, without being worth anything,” said a buyer of dollars that is advertised on several digital classified sites.

“Right now, every time I find someone who sells dollars, he is offering them above 0,95 CUC and yesterday I stumbled on the first one that already had a rate of 0,97.

En cualquier momento se pone a uno por uno”.