|
 [January 26, 2022] HAVANA
(Reuters) - The Cuban peso was trading at nearly 100 to the dollar on
the informal market Tuesday, according to a trader and online trackers,
a depreciation of more than 30% in less than a month and four times the
fixed official rate.
The peso's free fall is bad news for a population that for two years has
confronted a grave economic crisis
https://www.reuters.com/world/americas/
roaring-inflation-compounds-cubans-economic-woes-2021-06-16 and
unusually severe shortages of food, medicine and other goods, a
predicament made worse by the coronavirus pandemic and the Cold War-era
U.S. embargo.
Local economists and business leaders attributed the recent depreciation
to a growing perception that Cuba's economy
https://www.reuters.com/business/
cuba-sees-slow-economic-recovery-
4-2022-official-2021-12-12 continues to weaken, with runaway inflation,
while the government appears unable to reverse the trend.
Independent online news outlet El Toque tracker, the most watched in the
communist-run country, had the greenback trading for 97.50 pesos on
Tuesday, compared to 72 when the year began.
The local electronic currency, called the MLC, which Cubans use on par
with U.S. dollars to purchase goods in domestic specialty markets, was
rising in tandem with the U.S. currency. It was trading on the informal
market at 95.90 on Tuesday, the online trackers showed.
The peso and MLC have no value outside of Cuba. The government fixes the
exchange rate, currently 25 to a dollar, but has stopped trading dollars
and other exchangeable currencies because it says it has no cash.
"We have to deepen the political discussion with those who are
increasing prices in the state and non-state sector," President Miguel
Diaz-Canel told a Communist Party meeting last week, blaming speculation
and greed for rising prices.
Cuba's government late last year put annual inflation at 70%, but at
least three economists consulted by Reuters say the rate is between 300%
and 500%. Soaring prices have squeezed consumers already hard hit by
economic crisis and the pandemic.
The state controls most wholesale and retail trade in Cuba, offering the
most basic goods in pesos and virtually everything else in MLC, while
all wages are in pesos as are subsidized utilities and fuel. Health care
and education are free.
[to top of second column] |
A man shows Cuban Peso bills at a farmers' market in Havana January
15, 2015. REUTERS/Stringer/File Photo
Cuban officials in December said they hoped to ease the burden by driving down
inflation
https://www.reuters.com/markets/
currencies/
cuba-says-taming-inflation-priority-recovery-begins-2021-12-21 in the coming
months, but sources told Reuters that the government was increasingly hobbled by
the crisis.
Three foreign businessmen, requesting anonymity, said that some government
entities that had managed during most of the crisis to meet obligations to
suppliers and other foreign partners were for the first time falling behind on
payments.
"This has led people to realize the situation continues to deteriorate and MLCs,
like the peso or letters of credit, have no real backing so there is a flight to
exchangeable currency," one of the businessmen said.
That flight, they said, has further weakened the peso.
The government, meanwhile, had pinned its hopes of 4% growth in 2022 on the
recovery of the Caribbean island's all-important tourism sector.
“I think there was an expectation that the reopening of borders, airports,
hotels, and travel would bring in more dollars and improvements in the economy,
and that was holding back a further depreciation of the Cuban peso,” Pavel
Vidal, a former economist at Cuba's central bank, said.
“But this recovery is turning out to be slower than expected and there is great
pessimism everywhere, which is expressed in the exchange rate,” Vidal, who
currently teaches at Colombia's Pontificia Universidad Javeriana Cali, said.
(Reporting by Marc Frank; Editing by Dave Sherwood and Lisa Shumaker)
[© 2022 Thomson Reuters. All rights
reserved.]This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
 |
