Cuban peso at weakest in decades as economic crisis persists
Source: AFP
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The Cuban peso is at its weakest against the US dollar since the 1990s, a currency tracker said Sunday, as the communist island struggles through its worst economic crisis since the fall of the Soviet bloc.
It now takes 150 Cuban pesos to buy a US dollar -- and the same to buy a euro -- on the informal currency market, according to independent journal El Toque, which publishes a daily listing of unofficial exchange rates.
"The exchange rate is a reflection of the contraction in national productive activity, of scarcity, of monetary imbalances and of despair," Colombia-based Cuban economist Pavel Vidal told AFP.
Cuba is undergoing its worst economic crisis since the 1990s, with food and medicine shortages and daily blackouts.
The island's currency hit its low point of 150 at week's end, slipping slightly from the previous rate of 148 pesos to the dollar.
The island's central bank, trying to put the brakes on peso devaluation, last month began trading at a fixed parity of 120 pesos in state exchange houses -- the same rate then prevailing in the informal market.
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The dollar's value skyrocketed in January 2021 after the central government in Havana announced financial reform measures and set the official exchange rate at 24 pesos.
That unleashed a spiral in costs, with the inflation rate hitting 70 percent by the end of 2021.
Vidal said the government's "desperate" effort to obtain foreign currency to pay for imports and support productive activity was understandable.
"However," he said, "the exchange market is not the way."
A fixed rate of 120 pesos to the dollar "is not going to work in an economy that continues to suffer a balance-of-payments crisis" and where an aging electricity system results in regular blackouts.
Source: AFP
