Cuban government starts selling US dollars

Government Cuba announced that it will start selling US dollars and other currencies on a limited basis on the official financial market from August 23, something that has not happened for many years.

Economy and Planning Minister Alejandro Gil promoted this measure on a Cuban public television program, which was a significant step – albeit limited and gradual – in the comprehensive introduction of a genuine foreign exchange market in the country.

The goal is to “start selling foreign exchange in the financial system from tomorrow,” Gil said. The exchange rate will be 120 pesos (CUC) to the dollar, a rate similar to the informal market rate and the government’s initial purchase rate. The operation will have a commercial margin of 3% to 6%.

Since the beginning of August, the Cuban state has been buying international currency at a rate of 120 to one. Prior to this, the official rate was 24 cups per US dollar, a rate that is still held by companies and government agencies. The minister explained that the government’s intention is to “continue to move forward in building the exchange system” and regain “control”.

These transactions for the sale of foreign currency will be carried out only in 37 official exchange offices, CADECA, and primarily in cash and exclusively for individuals, Marta Sabina Wilson, Minister-President of the Central Bank of Cuba (CBC), also announced in this program. .

The starting limit per person per day will be US$100 or equivalent in other international currency. Wilson stressed that there is another “limit” to this foreign exchange market, since government sales will depend on previous purchases. Dollars purchased by individuals, the minister explained, cannot be deposited into freely convertible currency (MLC) accounts, Cuba’s virtual currency, which is used only for purchases in certain state-owned stores (the most widely represented at present).

One thing is the foreign exchange market, and another thing is the shops in the MLC. A dollar in cash entering the foreign exchange market today is sold in the foreign exchange market in cash. There is a demand for cash dollars in the country. pic.twitter.com/GRSljwe7hD

— Cuban Ministry of Economy and Planning (@MEP_CUBA) August 22, 2022

At the second stage, individuals will be able to buy foreign currency in banks and through bank accounts. It is also planned that in the future the number of exchange offices will be expanded. The minister confirmed that he wants the state to introduce more currency than what it sells to individuals and be able to use it for imports.

According to the UN, Cuba imports 80% of the goods it needs, and the current shortage problem the country is suffering from is partly due to the lack of currency from the Cuban state, a communist system that maintains a monopoly on foreign trade. .

The Cuban state has not bought or sold dollars since October 2004, when they were officially replaced by the convertible peso (CUC) and the subsequent creation of the MLC in 2019.