US Dollar Soars to Record High in Cuban Informal Market

[El Presidente]

 

US Dollar Soars to Record High in Cuban Informal Market Amid Inflation Concerns

By: María Alejandra Trujillo

Published: December 16, 2023 at 6:52 pm EST | Updated: Dec 16, 2023 at 10:17 pm EST

 

In a week that saw the informal market exchange rate for the US dollar in Cuba climb by five pesos, independent media El Toque reports that the US dollar has now reached a record high of 270 Cuban pesos. This surpasses the previous peak of 265 pesos late last November. Concurrently, the euro also experienced an upward surge, now traded at 275 pesos, while the freely convertible currency (MLC) commands a value of 250 pesos.

Impact on Cuban Salaries

This sharp rise in the dollar’s exchange rate further devalues the Cuban peso and erodes the purchasing power of salaries. Just a fortnight ago, the minimum wage of 2,100 pesos commanded an equivalent of 7.92 US dollars. Today, it has shrunk by 15 cents. Despite these unsettling trends in the informal market, the National Office of Statistics and Information (ONEI) reported a contraction in annual inflation in the formal market, dropping to 31.78% in November from 34.05% in the previous year.

The Unresolved Wage-Price Gap

Cuba’s Minister of Economy, Alejandro Gil, acknowledged the reduction in retail inflation but also conceded that the disparity between prices, wages, pensions, and overall income from work persist as a significant unresolved issue. Pedro Monreal, an economist, lent further perspective on social media X, elucidating the coexistence of both monthly inflation acceleration and interannual deceleration in Cuba. He cautioned against prematurely declaring a victory given the prevailing macroeconomic imbalances.

Is Actual Inflation Higher?

Monreal also opined that actual inflation in Cuba could be above official figures, as these do not factor in price accelerations in the informal market. The report concludes with stark criticism of the current economic management, arguing that Cuban leaders, trained more in demagoguery than economic improvement, are ill-equipped to ameliorate the country’s economic situation.

[NSXCIGAR]

 He cautioned against prematurely declaring a victory given the prevailing macroeconomic imbalances.

Yes, I hope the Cubans can resist the urge for early celebration.