August currency review

As we reported here, Cuba on 4 August devalued the peso by 80%, bringing exchange rates into line with those long available on the black market. At least, it devalued the 'buying' exchange rate for pesos, but not the selling rate. So, if you want to exchange foreign currencies for pesos at a bank or bureau de change, or use your foreign debit or credit card (NB cards issued in the United States won't work because of sanctions) in government-run shops, or fund your MLC (Cuba's digital currency) card with hard currencies, the new exchange rate of USD 1 / CUP 120 will apply. Electronic transfers can sometimes be made from abroad (although not the US) and again, the conversion will be at the new rate. Strictly speaking, if you wanted to sell your pesos back to receive foreign currency for them, you would receive USD 1 (or equivalent) for every CUP 24. This is the old dollar-pegged exchange rate, but in reality it only applies now to government business and imports of essential goods, and expatriates would be unable to access it, not least because of the shortages of foreign currencies available to the state and banking system. The central bank said after the reform that the new rate would move according to market sentiment, but this doesn't appear to be happening, so it has probably been fixed again against the dollar, at least for now. As always with Cuban money, the situation remains complicated. Please do get in touch if you need advice on managing your assignees in Cuba, or anywhere else.

Myanmar also devalued its currency in August, moving the fixed exchange rate from USD 1 / MMK 1850 to MMK 2100, a devaluation of 12%. Amid the chaos of post-coup civil war, national strikes, international sanctions and a currency that is plummeting on the black market, the devaluation is unlikely to do much to avert the economic crisis. More devaluations are sure to come.

* Buying rate (selling rate for hard currencies remains 80% lower)

Among the countries experiencing the biggest currency falls in August, Ghana's economy seems increasingly fragile. The country is suffering a long hangover from excessive borrowing a few years ago, with the costs of servicing its foreign debt so high - and recently made higher by rising interest rates around the world - that they have become effectively unaffordable. The government has approached the IMF for help, yet again, but conditions attached are sure to mean cuts in public spending and a lean time ahead for the economy. Ghana's credit rating has been downgraded, hence the recent slide in the value of the cedi.

On a more positive note, some currencies made significant gains in August (see next table). Among them was the Iranian rial, which regular readers will be more used to seeing on our biggest-losers table. The rial's value on the open market jumped 9% against the euro during the month, as significant progress was made towards rekindling the nuclear deal abandoned during the Trump presidency in the US. If a new deal is signed, many international sanctions against Iran would be lifted, allowing it to openly sell its oil and gas again on international markets.

** Open-market rate

Finally, here is this month's selected currency movements table: