After a Pause Caused by Melissa, the Dollar Rises Again
The Cuban authorities have failed in their attempt to discredit El Toque’s publication of informal exchange rates.
HAVANA TIMES – As specialists had predicted, after a brief lull during which the dollar’s exchange rate fell quickly from 490 pesos to 410, the US currency is now climbing sharply again in the informal market. The government’s renewed campaign against El Toque, which publishes daily street exchange rates, has done little good. If by Saturday the rate had already begun to rise to 415, by the next day it reached 420 pesos, and on Monday, 430 pesos to the dollar.
The independent outlet itself keeps illustrating how it gathers the data it publishes—the most recent example being this Sunday. Far from operating as the regime claims—accusing it of “speculative manipulation,” of serving the United States as part of “a comprehensive destabilization program,” and of “usurping” the role of the Central Bank of Cuba—El Toque (without directly mentioning that smear campaign) explains that it bases its figures on ads and social media posts collected daily, as well as on users’ responses.
It demonstrates this with data gathered on Saturday and Sunday. In a first chart, it reports the “histogram of published offers” and details: “Most offers are concentrated between 410 and 430 CUP/USD, with a midpoint of 420 CUP,” which “indicates that most market participants agree on that price range.” The average, 421.81 pesos, they continue, “is slightly above the median (420 CUP), suggesting that some sellers are beginning to ask higher prices.” That “slight difference,” they conclude, “may indicate upward pressure—that is, a rise in the dollar’s exchange rate.”
In a second chart, they show supply and demand, showing how the number of people interested in buying or selling dollars has evolved over time. The figures, the outlet insists, “are based on the amounts declared by users in their messages.” However, it clarifies: “Not all offers include precise quantities; therefore, the presented values constitute an undercount of the real movement—that is, the minimum detectable level of transaction intentions. Consequently, the market’s total volume is probably much larger.”
It concludes: “During October, the volume of operations remained relatively stable. Nonetheless, toward the end of the month a change in trend is observed: purchase requests (demand) increase and sales offers (supply) decrease. This imbalance—more people willing to buy and fewer to sell—usually foreshadows increases in the dollar’s price if the trend continues.”
The article recalls that economist Pavel Vidal, head of the Observatory of Currencies and Finance (OMFi), has often explained that movements in the informal exchange rate are determined by the balance between supply and demand. “If the demand for dollars, euros, or MLC (freely convertible currency) exceeds supply—because many individuals or private enterprises seek foreign currency to import, travel, or protect their savings from inflation—the price of those currencies in Cuban pesos tends to rise. Conversely, if more people are willing to sell than to buy—due to an increase in remittances, tourism, or a recent appreciation of the dollar—the rate can fall.” This is the basic law of supply and demand, practiced everywhere in the world except in Cuba, where the regime tries, unsuccessfully, to ignore it.
Expectations also play a role, it continues—such as “rumors about new sanctions, announcements of regulatory changes for small and medium enterprises (mipymes), remittances, or banking operations, as well as modifications to monetary policy”—along with other factors like liquidity or financial regulations.
In the case of last week’s drop, some experts associated with Observatory of Currencies and Finance link it to the effects of Hurricane Melissa, specifically the inflow of foreign currency and donations sent to support the country and families.
In his October report, Pavel Vidal stated that the economic crisis on the island “has no end in sight, and no possible solutions are visible in the short or medium term,” predicting that the dollar could even surpass 500 pesos by the end of October in an “extreme” scenario. Before the recent decline, it had nearly reached that point.
Regardless of short-term forecasts, the scenario outlined by the Cuban economist—now based in Colombia—regarding the unstoppable devaluation of the national currency remains valid. Among the factors: the collapse of tourism, vital for earning foreign exchange; the fact that having hard currency is the only way to buy in the increasingly numerous dollarized stores; the energy crisis and “very limited access” to inputs and financing, which negatively affect production and heighten dependence on imports; and the “lack of confidence in the future of the economy and in the government’s ability to confront the crisis,” which drives capital flight and encourages people to “accumulate savings” in strong currencies.