Boots & Sabers

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2129, 10 Sep 22

Cuba’s Money Woes

You can’t escape economic realities. I’d laugh at them, but we’re dangerously close behind.

It wasn´t supposed to be this way. In early August, the Cuban government reopened trading houses closed for nearly two years to citizens and tourists, at a favorable rate on par with the thriving black market, a move it said would help stabilize the peso.

 

“The state must reestablish control of the exchange rate,” Economy Minister Alejandro Gil said at the time of the announcement. “We will defend our … rate at 120 pesos to the dollar.”

 

The black market, however, has not been swayed.

 

On Thursday, the peso weakened to 155 to the dollar, El Toque reported, its lowest point since the so-called “Special Period” in Cuba, the deep economic depression that followed the 1991 collapse of former benefactor the Soviet Union.

 

“The price of a dollar is the price at which you find it, not the one the government wants to impose,” said Ricardo Torres a U.S.-based Cuban economist. “The reality is, the government hasn´t resolved the underlying problems.”

 

Torres says a record-breaking emigration of Cubans – upwards of 180,000 have arrived at the U.S.-Mexico border in the past year – is one extraordinary factor driving the peso´s dramatic plunge.

 

If each of those migrants needed a conservative $8,000 to make that voyage, that´s upwards of $1.4 billion in demand for dollars, at least some of which was likely bought on the black market in Cuba, Torres said.

Also note that that’s probably about $1.4 billion that flowed into the hands of cartels. Biden’s Bloody Border is destabilizing the whole region.

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2129, 10 September 2022

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