Juan Palop
Havana, December 18 (EFECOM).- This Thursday a new exchange rate was introduced in Cuba – the third official exchange rate in parallel. This is the latest attempt by the authorities to combat the serious distortions in the foreign exchange market, which are a key element in the deepening of the crisis on the island.
The Central Bank of Cuba (BCC) set the rate on the first day at 410 pesos per dollar, which puts it at the bottom of the informal market range, implying a tacit endorsement of this exchange rate that the Cuban government has repeatedly reviled.
As the Prime Minister of the BCC, Juana Lilia Delgado, explained the day before, this new “floating” exchange rate, which changes daily to maintain a “competitive price” according to supply and demand, is reserved for the state to purchase foreign exchange from exporters and other foreign exchange suppliers.
Delgado emphasized that this new exchange rate is part of the first phase of the “gradual” and “responsible” exchange rate unification process that the government wants to carry out. The aim is to “gradually close the currency gaps that affect the economy and families,” he explained.
In this first phase, he added, the other two official changes remain unchanged: those for legal entities (24 pesos per dollar) and those for natural persons (120 pesos per dollar). For comparison: The reference rate published daily by the independent medium El Toque was 440 pesos per greenback this Thursday.
“The decision to recognize a third segment is based on the objective existence of differences between official exchange rates and the real value reflecting the scarcity of foreign currencies,” Delgado admitted.
Cuba has been suffering from a severe economic crisis for more than five years, with shortages of basic goods (food, medicine, fuel), persistent daily power outages, high inflation, partial dollarization and mass migration.
Several Cuban experts consulted by EFE expressed doubts about the new measure of the Cuban government, although with important nuances between the different opinions.
The economist Mauricio de Miranda spoke of “a new nonsense in economic policy” and argued for a “single exchange rate” that would be set by the market and not by institutions.
For his part, the economist Miguel Alejandro Hayes doubted the success of the measure, since, in his opinion, the ultimate goal is not so much monetary stabilization as the introduction of a “recovery tool” of foreign exchange for the state, used not for development investments but for business plans.
Economist Pavel Vidal, in turn, emphasized that the mechanism for setting the new rate is neither transparent nor simple, pointing out that it provides for “clear restrictions” on the purchase of foreign currencies. “The informal market will continue to play a relevant role as a complementary means of meeting unsatisfied demand,” he predicted.
Economist Ricardo Torres welcomed the introduction of a legal way to buy and sell currencies at a competitive rate, but warned that it would be necessary to see how the mechanism works over time, as there is a risk that the BCC will set the rate at its own discretion.
For his part, economist and political scientist Arturo López-Levy told EFE that, in his opinion, the problem lies not so much in the diversity of interest rates – which has worked in other economic transitions – but rather in the “transparency” of the mechanism and “in the size of the gaps” between the different types.
He believes the measure can be a “step in the right direction” if structural reforms are implemented next. “Foreign exchange policy cannot replace the reform of the economic system,” he added.
The rate was launched a day after El Toque – known for publishing the daily informal market reference rate – reported the suspension of its website on the island following a serious cyberattack.
The Cuban government and official media have been attacking this Miami-based media outlet for weeks, accusing it of being funded by the United States, being counter-revolutionary and destabilizing the country. The executive branch has even spoken of “economic terrorism.”
The media has repeatedly rejected these accusations, explaining that the rate is calculated based on an algorithm – without human intervention – that tracks forex trading advertisements on forums and social networks and filters out anomalous and extreme values. The process is overseen by renowned Cuban economist Pavel Vidal.
Regarding funding, director José Jasán Nieves told EFE in November that about 50% of El Toque’s annual budget comes from US international cooperation, but denied that this influenced the editorial line.
Many independent Cuban media outlets based in Miami and Madrid are inaccessible from the island (unless systems such as VPNs are used), which is believed to be blocked by the government (although there is no explicit acknowledgment).
The official media Razones de Cuba defended this Thursday a possible blockade of El Toque based on “the logic of sovereign defense,” which, in their opinion, should also be exercised “in the digital environment.”
EFE asked the Cuban government for a response to the complaint about the blocking of these independent media, but has not yet received a response. EFECOM
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