Central Bank of Cuba to Implement Floating Exchange Rate in Foreign Exchange Sales

A new foreign exchange rate will take effect in Cuba starting December 18th. The president of the Central Bank of Cuba, Juana Lilia Delgado, announced during a special press conference.

The decision has been made to implement measures that guarantee the transformation of the foreign exchange market. Stated Delgado whose address was broadcast on the television channels Cubavisión, Cubavisión Internacional, and Caribe.

She also explained that in the first stage, “its structure has been conceived in three exchange segments. Two fixed exchange rates—already existing—segment I operating at 1 to 24. Segment II operating at 1 to 120, and a third segment with a floating exchange rate.”

Moreover she added that the floating rate “will be published daily by the Central Bank of Cuba in its capacity as the country’s monetary authority.” “The decision to recognize a third segment is based on the objective existence of differences between the official exchange rates and the real value. Which reflects the scarcity of foreign currency,” she argued in the statement, which was also broadcast by Radio Rebelde and Radio Havana Cuba.

Emphatically, the president of the Central Bank of Cuba pointed out that “the first two market segments will be maintained. In such a way as to prevent abrupt devaluations of the exchange rates. Therefore, of the value of the national currency.”

Thus, she asserted, the population can be protected in basic and sensitive transactions. Preserving stability and predictability in the prices of essential goods and services. Futhermore the third segment will facilitate exporters and other suppliers of foreign currency to sell at a competitive Price. Determined by supply and demand, Delgado noted.

Its purpose is to incentivize the inflow of foreign currency into Cuba, “which will constitute a source for their operations and reduce the pressures and irregularities of the informal market.” Furthermore, the official stated that this decision “is part of a set of financial, commercial, tax, and other measures” to “improve the efficiency of the Cuban economy.”

“Among the measures to be implemented, the stabilization and progressive strengthening of the so-called MLC (Freely Convertible Currency) accounts stands out. Contrary to what some have falsely speculated or claimed,” she pointed out.

The objective, she said, is clear: “to strengthen the purchasing power of the MLC and its value in use.” According to Delgado, “the operability of bank accounts for non-state management entities will be guaranteed. Allowing them to carry out foreign currency transactions both domestically and in foreign trade operations.”

The purpose, she insisted, is to gradually close the monetary gaps that affect the Cuban economy and families. She also reiterated that the legal provisions for the transformation of the foreign exchange market will be published in the Official Gazette, will take effect this Thursday. And the Central Bank will publish the exchange rates daily on its website.

“Exchange rate transformations are not an end in themselves, but a tool to organize the economy and strengthen the financial system. This is a gradual, responsible, and transparent process. In accordance with Cuba’s specific conditions,” declared the president of the Central Bank.

With information from Prensa Latina