HAVANA, Jun 12 (EFE) The probable immediate consequence of the Cuban government’s decision to suspend bank deposits in cash dollars will be that the green
the currency will be dethroned by the Euro and this will skyrocket its value in the informal market, complicating, even more, the life of those who do not have access to the European currency.
The Government announced on Thursday, causing general perplexity, that from January 21 it will temporarily stop accepting income in dollars “in view of the obstacles imposed by the US economic blockade so that the national banking system can deposit cash abroad. in US dollars that are collected in the country.
” The move comes a year after the country partially dollarized its economy, including the sale of staples and food, as a strategy to raise foreign exchange amid the most serious crisis in three decades, translated into rampant shortages.
The opening of foreign currency stores caused great discomfort in the population, who neither charge in those currencies nor can they buy them from the State in banks or exchange houses.
The only way to obtain them to access these products was the informal market, where the dollar began an unstoppable climb to reach 70 pesos this week compared to the official rate of 24 pesos per dollar. The euro, meanwhile, is around 80 pesos compared to the official rate of 29.2.
Several economists agree that the step announced yesterday will elevate the euro as the reference currency and they also see a strategy to raise a high volume of dollars in circulation in one sitting. In addition to being a reference, the European currency can also be converted into the “survival” currency, especially when most of the basic products are sold in those stores where you can only pay with a card linked to a bank account in which you used to you have to deposit the hard currency.
But this will happen in a context in which much less euros than dollars circulate: due to the pandemic, the country has limited flights to a minimum, hardly any tourists arrive, and remittances that come in cash are, above all, in dollars.
“The measure dethrones a king (dollar) to establish another (most likely the euro) and if the State does not take care of the exchange between these currencies and the exchange between them and the Cuban peso, the informal market would take care of it.
The dollars current ones are not going to evaporate, “economist Pedro Monreal predicted on Twitter. Regarding the thesis that the decision seeks to stop the unstoppable rise of the dollar, Professor Julio Carranza said that “in real terms, this does not stop either current inflation or the devaluation of the Cuban peso, which will continue to be expressed in other currencies and above all in prices “.
Monreal, in turn, also commented that “if the dollar is exchanged for euros in the informal market in Cuba, it is likely that the purchasing power of the dollar will be further reduced because the trajectory of the market’s ‘local’ exchange rate informal could be more unfavorable than the international market trend. ”
His colleague Pavel Vidal, a professor at the Javeriana University of Cali (Colombia), said that “there could be a ‘eurization’ or participation of other currencies in non-state markets, as a means of exchange and as a store of value.”
“Hardly someone is going to want to accept payments in dollars, if later they will not be able to deposit them in the banks to buy in the stores” in foreign currency, said the expert, quoted by the independent journalistic platform El Toque.
The measure will also affect those who send cash remittances to their families “informally” from the US, the only way to do so at this time after Washington sanctions forced the closure of Western Union and other channels established by Fincimex, one of the sanctioned state companies.
PRESSURE ON BIDEN?
“Those who have to exchange dollars outside of Cuba to obtain euros in cash (…) would probably face a trend of loss of purchasing power of the dollar because that is the forecast of the international market,” Monreal warned.
Economist Óscar Fernández wrote on Facebook that the initiative “seems more like an attempt to control the devaluation of the peso in the informal market and incidentally take a cash-harvesting coup”, but warned that if the measure is not “strictly temporary”, “stores should be closed” in foreign currency.
“A key question is what conditions have to change for Cuban banks to accept deposits in USD again?” He asked.
The answer was already given yesterday by the Central Bank of Cuba: “the duration of this measure will depend on the elimination of the restrictions that prevent the normal operation of the export procedures of the US currency.”
In other words, the elimination of US sanctions. Therefore, some understand that Cuba has adopted this decision to pressure Washington to loosen the nuts that the previous Trump administration left as tight as possible, a matter for which the Joe Biden administration has been in no rush until now.
Cubans, meanwhile, took to social networks to protest a measure that, they say, is really pressuring them.