Cuba will begin selling dollars to the population as of this Tuesday, authorities reported on Monday, 20 days after banks and exchange houses began buying foreign currency at 120 Cuban pesos with the intention of building a foreign exchange market.
“We are going to start selling foreign currency starting tomorrow,” Economy Minister Alejandro Gil said during the state television program Mesa Redonda.
The measure is aimed at “building a foreign exchange market” in the country “that allows a legal exchange of currency, that allows progress in giving the national currency greater purchasing power,” Gil said.
With the intention of snatching dollars from the informal market, on August 4, banks and exchange houses began buying dollars at 120 Cuban pesos per US dollar, a rate that at that time was similar to that in force in the informal market.
The sale of the dollar had been suspended since June 2021 due to lack of liquidity. The price of the US currency soared almost five times on the black market after the government put into force a financial reform in January of that year, with which it pegged the currency at 24 Cuban pesos.
Three weeks ago the authorities explained that, without having foreign currency to sell, they had to start only with the purchase.
take back control
The president of the Central Bank, Marta Sabina Wilson, said that the measure had “a favorable result.” In these 20 days, financial entities have “bought 10 times more foreign currency than they would have bought in a month with the exchange rate of 24” Cuban pesos.
But the sale of dollars will only be aimed at citizens, not at small and medium-sized private companies, he said.
“The exchange rate that has been taken into account (for the sale) remains at 120 Cuban pesos per currency,” Wilson said.
The sale of dollars will be limited to branches of Cadeca, Cuban exchange houses, but airport and bank locations will not be authorized for this operation.
These branches, located in the center of each municipality, will only “sell what they have bought,” said the president of the Central Bank, clarifying that each user will only be able to purchase up to 100 dollars.
This price of 120 pesos per dollar does not cover all economic activities.
The government maintains two exchange rates in force, with which the official parity of 24 pesos will continue to be in force for transactions of state companies and other activities of the economy of the socialist island.
When the purchase was announced, Cuban economists criticized the move as incomplete, saying it would skyrocket the price of the US currency on the black market.
At that time the informal rate was around 120 pesos per dollar, this Monday it was trading at 140 pesos on the black market.
“We are going to defend the exchange rate at 120. Now we are going to find a way for the State, already participating in the sale operation, to be able to defend that exchange rate,” assured Minister Gil.
In a first step, the authorities have to “stabilize the exchange rate” so that the state can regain control of the foreign exchange market that it had lost, he concluded.