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Cuba said late on Thursday it would scrap its dual currency and labyrinthine multiple exchange rate system in January, effectively devaluing the peso heavily to administer bitter medicine for its crisis stricken economy.
Announcing the long-awaited monetary reform in a televised address to the nation, President Miguel Diaz-Canel said the Cuban peso would be fixed at a single exchange rate of 24 per dollar, while eliminating other more favorable rates.
The devaluation comes amid Cuba’s worst economic crisis since the collapse of former benefactor the Soviet Union due to the tightening of the U.S. trade embargo and fallout from the pandemic.
“We consider the conditions have been created to enable us to announce the start of the task of (monetary) ordering from Jan. 1,” said Diaz-Canel, sitting next to Cuban Communist Party chief Raul Castro.
For nearly three decades, two currencies have circulated in Cuba’s state-run economy: the peso and the convertible peso (CUC), pegged to the dollar.
These have been exchanged at various rates: 1 to 1 for state-owned businesses, 24 pesos for 1 CUC for the public and others for joint ventures, wages in island’s special development zone and transactions between farmers and hotels.