The American dollar reached 350 pesos (CUP) in the informal market in Cuba on Friday, marking a new record high after a week of continuous increases in the value of foreign currencies. The euro also saw a significant rise, trading at 355 pesos. This surge in currency value has highlighted the severe inflation affecting the Cuban economy, with the national minimum wage now equating to just six dollars.
Since December 31, 2023, the Cuban peso has depreciated by 90 units against the dollar, indicating a significant decline in the national currency’s value. Economist Steve Hanke noted that the Cuban peso has depreciated by 49% against the dollar since January 23.
The Cuban government has announced plans to intervene in the informal currency market as part of its economic package. However, experts warn that this move could lead to a further devaluation of the Cuban peso, exacerbating the economic crisis faced by everyday Cubans.
Economist Rafaela Cruz predicts that a potential devaluation could reach 200%, drastically reducing the value of the national currency. This would have a detrimental impact on the majority of Cubans who do not have access to foreign currency or remittances, worsening the already dire humanitarian situation in the country.
Cruz also notes that monetary adjustments must be accompanied by real economic reforms to address the root causes of inflation. Without sustainable growth and increased production, any devaluation of the currency is unlikely to yield long-term benefits for the Cuban economy.