Cuba will start selling dollars to create an official foreign exchange market

Cuba will start selling dollars to create an official foreign exchange market

Cuba intends to create an official foreign exchange market, authorities have announced.

The Cuban government will start selling dollars to its population from today, 20 days after it started buying it at black market prices, with the intention of creating an official foreign exchange market in the country, authorities said on Tuesday .

We will start selling currencies from Tuesday, Economy Minister Alejandro Gil announced during a state television broadcast.

This measure aims to build a foreign exchange market in the country that allows legal exchange of currency, which in turn will increase the associated purchasing power to the national currency, Gil said.

A significant portion of the Cuban population receives dollars – sent by relatives living abroad or from services provided to tourists visiting the island – which they then exchange most often on the black market , and which therefore completely bypass the official economy.

With the intention of extracting the circulation of these currencies from the black market, the President of the Central Bank Marta Sabina Wilson announced on August 4 that banks and exchange offices would now buy dollars at the rate of 120 pesos per greenback, that of the informal exchanges at the beginning of August, against 24 pesos for the official rate.

According to the president of the Central Bank, Marta Sabina Wilson, this measure had a result favorable. In twenty days, financial institutions bought ten times more currency than they would have bought in a month with the exchange rate at 24 pesos, she said.

For the sale of dollars, the exchange rate taken into account is maintained at 120 pesos, she said.

The American currency has soared in the market black since the implementation in Cuba, in January 2021, of an economic reform fixing the rate of the dollar at 24 pesos, and the suspension last June of the sale of dollars to the population due to the lack of liquidity .

Only branches of Cadeca, Cuba's official money changers, will be allowed to sell dollars, and they will only sell what they buy, Wilson said.

On Monday, the black market rate was 140 pesos to the dollar, but Mr. Gil ;is said to be determined to maintain the rate of 120 pesos for purchases and sales by the State.

We will defend the exchange rate of 120. We will seek the way for the state, which is now involved in the sales operations, to defend this rate, he said.

Cuba is currently going through its worst economic crisis in thirty years, with a growing shortage of food, medicine and fuel, due to the consequences of the coronavirus pandemic and the tightening of the economic embargo of the United States.

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