The Cuban peso heading towards the abyss

The Cuban peso heading towards the abyss

HAVANA, December 15. The euro and the freely convertible currency (MLC) experienced new increases in the last 24 hours in the informal currency trading market in Cuba,In both cases reaching round figures that further consolidate the abyss of the Cuban peso.

The European currency is chaining two consecutive days of increase this Friday and reaches 280 pesos, two more units compared to the previous day.

It is striking that the value of the euro in the informal market has risen five pesos in just 48 hours, after having remained unchanged for nine days.

For the second consecutive day, the average sales price of the MLC also increased, reaching 250 CUP, one peso more compared to Thursday.

Regarding the dollar, this December 15, for the seventh consecutive day, it is sold on average at 270 CUP, as reported by the independent media elToque on the daily rate that reports the price of currencies in the informal market in Cuba.

In the median values of the last 24 hours, average purchase offers for the euro are recorded at 275 pesos and 280 for sale.

In the case of the MLC, the median marks 248 pesos for purchases and 250 for sales.

And be careful, the dollar registers purchase offers at 270 CUP and up to 272 for sale, which could anticipate an imminent rise in the US currency.

The rise in the price of reference currencies in the informal market benefits those who carry out such transactions at the street level to satisfy the growing needs of daily life.

The informal exchange market governs a large part of the lives of citizens residing on the island, who remain suffocated by inflation, shortages and the unstoppable economic crisis.

An article published by elToque on Wednesday analyzed the exchange rate swings of recent months.

So far in 2023, the Cuban peso has accumulated a depreciation of close to 50% against the dollar and the euro in the unofficial foreign exchange market.

However, looking ahead to the coming months, the aforementioned source anticipated that, although “the macroeconomic factors that support the devaluation of the Cuban peso will continue, it is likely that the pace or speed of the depreciation will tend to moderate during 2024.”

An article published in November in the pro-government newspaper Granma described the value of the dollar in the informal market as “fictitious.”

The Venezuelan economist Pasqualina Curcio asserted that the currency buying and selling movements in the informal market do not reflect the economic reality of Cuba, and estimated that it is a “political and economic manipulation of external forces, designed to destabilize governments not aligned with the American foreign policy.

A later article published by elToque called such a statement “misleading” for simplifying the phenomenon.

“The emergence of the informal currency market and the evolution of the value of the Cuban peso against foreign currencies are a reflection of Cuba’s economic crisis and government decisions. The crisis has multiple roots, including past and current policies,” said Glenda Boza. Ibarra.

“In the context of a deep economic crisis, characterized mainly by an acute shortage of foreign currency in the economy as a whole, the inevitable outcome is the depreciation of the national currency,” the aforementioned source added.

Economist Ricardo Torres, for his part, described it as a “serious economic policy error” to consider illegal transactions that reflect the supply and demand of foreign currency and indicated that the same authorities could begin to create mechanisms to regularize that market.

The reference rate of elToque – which bothers the Cuban government so much – is prepared after analyzing the purchase and sale advertisements published on social networks and classified websites. From this result, a price is established that is used to know the values of the main currencies that circulate in the country.