Hello, friends. Today I want to talk about something that is going around in the Cuban streets and that in theory will happen in February. I am referring to the Cuban government's attempt to take control of the foreign exchange market, something that was once under its control, but is currently a very complex situation, since the state does not offer a price competitive to what can be obtained on the black market.
In a country, he who controls the foreign exchange market basically has the economy in the palm of his hand. And the Cuban government knows this, which is why it is moving its chips to try to dominate foreign exchange. The intention is to retake control of that market which is mostly in the hands of the informal market. But, here comes the million dollar question: How do they intend to do it? That is the question I ask myself the most.
In the last few weeks, foreign exchange has been rising almost daily. The formal market, which is governed by a fixed exchange rate, has great disadvantages, as it does not adjust to real economic conditions. Nothing to do with the informal market, which offers a floating exchange rate, since the value of currencies is determined by supply and demand in this market.
Banks here quote the USD at a modest 120 Cuban pesos, while in the informal market the value of the US dollar is significantly incomparable, since it is priced at 290 Cuban pesos. We are talking about a little more than double, about 2.4 times more.
The big question is, how do they intend to achieve total control? If they do not offer a price closer to the real value, it is going to be complicated. In addition to those factors that threaten this, such as the bankarization implemented by the government, which has been a failure and has only made the population more distrustful of banks. Another problem they will have to face is supply and demand, since the shortage of foreign currency they have will not be able to supply the demand.
We are all waiting to know what new decree or law they will implement, what value will they put on the foreign currency, what exchange rate will they implement? And, best of all, will they achieve the desired result? I jump into the pool with this one: I have a hunch that this attempt is more likely to fail than to succeed. But, of course, I could be wrong. There is always that possibility, although, if successful, it would be a surprise to more than one.
The country's economy is currently in great difficulty. And if we talk about effective government policies in recent years, it would be more than easy to give an exact figure for success, since the magic number is 0.
Do you think the government is going to achieve control of the foreign exchange market? Since 2021 they have not managed to implement anything with any success. Since Task Ordering, which was the beginning of Cuba's economic debacle, which is why many believe it will be another failed attempt. Besides, I do not see a possible solution in any economic aspect as long as there are no radical changes; something non-existent at present.
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Original text in Spanish: Translated and formatted with Hive Translator by 
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