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    Foreign exchange market, a way to go

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    Mercado cambiario, un camino por recorrer

    The foreign exchange market is the space where currencies are bought and sold, which allows connecting the national currency and foreign currencies. The price by which currencies are acquired is what is known as the exchange rate. The main purpose of the exchange rate policy is to influence this price and its stabilization based on the objectives of economic development.

    In this market, foreign exchange providers are: exporting companies, foreign visitors, recipients of remittances and other agents that receive foreign exchange; while the plaintiffs are: economic agents who need to import, travel abroad or who require foreign currency for other purposes.

    An exchange market is essential to connect productive agents with the outside world, both for their input needs through imports, and for the sale of their productions through exports.

    Hence, this market and its exchange rate influence all prices in the economy. In general, it allows economic agents access to foreign currency in a legal and timely manner, offering security, trust and transparency. It contributes to the development of efficient planning based on economic and financial mechanisms and to a better climate for foreign direct investment.

    In addition, achieving exchange rate stability makes it possible to control inflationary pressures. When an exchange market is inefficient and does not work properly, it generates distortions that prevent the achievement of the objectives mentioned above, limiting the productive capacities, economic growth and development of the country.

    For all these reasons, the creation and development of an official foreign exchange market for the Cuban economy is essential. This foreign exchange market must be capable of satisfying the supply and demand of foreign currency, and therefore guarantee, through an economically based exchange rate, exchange operations in both directions (purchase and sale).

    At the same time, it must allow access from the national currency to all goods and services in the economy, eliminating dollarization. In this process of developing the foreign exchange market, it is essential to achieve stability in the exchange rate, starting from guaranteeing the macroeconomic balance.

    For this, it is essential to advance in the reduction of the fiscal deficit and the monetary issue; the downsizing of the state sector based on greater efficiency and effectiveness of public spending; the control of salaries without productive support, of excessive profits and of payments to private parties, among other factors.

    The ultimate goal should be to establish a foreign exchange market for the entire economy with a single exchange rate that guarantees the connection with currencies from the national currency. It must be taken into account that the instrumentation of the foreign exchange market is part of a much larger scaffolding, where no isolated measure will bring satisfactory results by itself, and that, as an organic whole, it will have more impact when the whole is deployed in its entirety of transformations of which it is a part.