Cuba announced on Monday (22) that it will begin exchanging dollars and other foreign currencies for the local peso on a limited basis after a two-year hiatus during which residents turned to an informal currency market.
The decision to start selling dollars and euros in Cuba, which can barely afford such transactions, is aimed at extinguishing the black market, said Economy Minister Alejandro Gil, who officials blamed in part for rising inflation.
“We are going to take steps gradually… to give the national currency greater purchasing power,” Gil said on state television on Monday night.
The peso has no value outside of Cuba, so Cubans looking to travel, migrate or buy basic goods at hard currency stores on the island have been rushing to the black market, increasing demand for foreign currency and driving down the value of the peso.
The government sets the exchange rate, currently at 25 pesos to the dollar, but almost three weeks ago it started buying – although not selling – foreign currency for 120 pesos to the dollar, a “first step”, Gil said in early August, in combating informality in the market.
The peso, however, has continued to fall on the still-existing, albeit illegal, black market since the announcement, weakening to 140 to the dollar, according to independent online news channel El Toque.
Central Bank President Marta Wilson Gonzalez said Monday night’s announcement will help boost the purchasing power of Cubans who earn only in pesos but don’t have access to foreign currency through remittances or the oil industry. tourism.
Cubans, the BC president said, will be limited to a maximum of US$100 per transaction, and these exchanges will depend on the availability of money in each location. Dollars will not be sold at airports, she added.
Cuban banks and exchanges stopped accepting dollars to their citizens in 2020 citing US sanctions, and stopped selling foreign currency for pesos to the public soon after, claiming they simply had no money.
The government said inflation was 77% in 2021 and 28% through June this year, while many independent economists at home and abroad say it is in the triple digits.
Source: CNN Brasil
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