The US dollar, nigh impossible to obtain legally in communist-run Cuba, has become a coveted commodity raking in double the state-determined exchange rate on the black market as the peso falters.
Since a new currency structure came into force on January 1, the Cuban Peso or CUP — its value artificially set by the government at 24 to the dollar — is Cuba’s only legal tender.
But economists say the CUP is massively overvalued.
This, combined with a simultaneous government drive to amass foreign currency with which to buy much-needed imports, has seen Cubans pay as many as 50 CUP on the black market for one dollar — the only money that can buy many basic goods on the island.
“I don’t think that there are many countries in the world that have that level of overvaluation of their currency (the CUP),” according to Pedro Monreal, a Cuban economist.
And as the CUP continues weakening on the black market, pressure could be building “for a new official devaluation,” he added.