The value of the US dollar in Cuba is still unknown, given the government's announced intervention in the black market for foreign currency.
However, economic experts, such as Cuban economist Pedro Monreal, have already made calculations and projections.
Monreal he pointed Recently, the lack of official data for the "equilibrium" exchange rate of the Cuban peso, which is considered a "blind spot" in the discussion about the new economic package being implemented on the island this year.
In a previous article published on his personal blog The State as suchThe expert explained that "the 'equilibrium' rate is an important piece of data because it provides a reasoned reference as to whether the official exchange rate is distorted or, on the contrary, adequately reflects the conditions required for the system to be macroeconomically balanced."
What is the equilibrium rate?
The equilibrium rate is an economic concept that refers to the exchange rate, interest rate, or price that allows supply and demand in a market to be in equilibrium. In other words, it is the rate at which the quantities demanded and supplied are equal.
Dollar in Cuba: Two possible scenarios for the equilibrium rate
Monreal proposes two possible scenarios for this equilibrium rate in Cuba, under current conditions:
- Escenario «A»: 50-53 CUP/USD, basado en la tasa oficial de variación de precios de consumo (31,34%).
- Escenario «B»: 74-77 CUP/USD, basado en la inflación estimada por The Economist Intelligence Unit (62,3%).
As explained, these scenarios are calculated using the stock equilibrium (SE) method, which allows for the calculation of an exchange rate compatible with a medium- to long-term macroeconomic equilibrium. This method considers a desirable level of net foreign assets, GDP growth, and inflation.
USD exchange rate in Cuba: Equilibrium rate vs. official government rate
As we have explained, the equilibrium rate is a theoretical calculation that represents the exchange rate that would allow supply and demand in a market to be in equilibrium.
On the other hand, the official rate is the rate set by a country's government or central bank. It can be arbitrary and does not necessarily reflect market equilibrium conditions.
Governments often set official interest rates to achieve certain economic policy objectives, such as controlling inflation, stimulating or slowing economic growth, or managing the value of their currency in foreign exchange markets.
If the official rate is too far from the equilibrium rate, it can create distortions in the economy, such as the formation of black markets for goods and services, financial speculation, or capital flight. On the other hand, if the official rate is adjusted closer to the equilibrium rate, it can help correct these distortions and improve the economy's efficiency.
Según los cálculos de Monreal, una tasa de «equilibrio» entre 50 y 53 CUP/USD representaría una devaluación de 108 a 121% respecto a la tasa oficial actual, mientras que una tasa entre 74 y 77 se traduciría en una devaluación de 208 a 221%.
The economist argues that, although Cuban monetary authorities have some leeway between the equilibrium rate and the official rate, ignoring the equilibrium rate could have negative consequences.
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5 comments
The Japanese, for the first 10 to 20 years after starting a business, reinvest all profits into growing the business... In Cuba, they open a micro-enterprise and within a month they have Chevrolet trucks and high-end cars... I don't understand anything... and they only resell manufactured products, many of which are domestically produced and purchased abroad.
I am not an economist, but those people are certainly not businessmen.
That the stores in the Dolores area of the government lower their prices, just like the local businesses, since they were the ones who caused all this catastrophe with the different currencies in Cuba. They should stop stealing from the common people. And you'll see how the currency stabilizes. And they'll let the population, producing food and wealth, without the intervention of the government, who wants to put their hands, natives, and all the Cuervo, in all the country's businesses. Enough of so much theft.
In my opinion, which is not that of an economist, working on an imaginary equilibrium rate is the biggest stupidity a government can commit. Cuba's real equilibrium rate is currently around 350 Cuban pesos per dollar, and if the state doesn't provide a real offer to the people, it will spiral out of control in a few months, completely destroying the country's economy due to capital flight.
Lo que realmente necesita este país es que la persona responsable de poner un precio al dólar en cuba haga comparecencia en la tv cubana como hizo el Comandante en 2001-02, (bajo las mismas leyes arbitrarias y el mismo bloqueo,) cuando de creyó la vida de las torres gemelas iban a poner de cabeza al mundo y puso precio tope al USD de 25 cup… no digo q lo pongan a ese precio otra vez, seria ridículo pero hay q acabarle de poner un freno a esta locura porque el cubano q no tiene familia fuera, q gana un salario mínimo no tiene acceso al uso y menos a las tiendas donde solk se paga en USD o MLC… estamos en viviendo bajo un estado burgués, el q pueda??? felicidades, y el que no? q se tape hasta donde le de la sabana!!! no creo q este hubiese sido el camino a tomar si FIDEL estuviese vivo y al mando… quieren que esta economía mejore? acaben de poner un precio tope al USD y si quieren recaudar en las tiendas el dolar q esta en la calle? entonces dejen q las personas paguen en las tiendas en efectivo, ya sea en USD, MLC o CUP al valor fijo del cambio (q esperemos no llegue en 2030)
BUT IF THE ONE YOU MENTION AS THE SOLUTION WAS AND HAS BEEN THE ARCHITECT OF THE MISFORTUNE THAT YOU ARE EXPERIENCING, HOW IS THE SOLUTION GOING TO BE THE PROBLEM? IS IT TRUE THAT WE CUBANS ARE BLIND? WHILE WE ATE FRUIT WINE AT THE NEW YEAR'S EVE DINNER? THAT MAN YOU MENTION ATE WINES EVERY DAY THAT COST UP TO 900 FRENCH DOLLARS AND HE TOLD YOU THAT YOU HAD TO RESIST. FIDEL IS THE NUMBER ONE PERSON RESPONSIBLE FOR THE MISFORTUNE OF THE CUBAN PEOPLE.