eli5: why do Cubans use the informal currency market?


I hope someone can help me understand this: the cuban government has a current official exchange rate of 123 CUP for 1 USD for tourists and population (higher than the other official exchange rate of 24 CUP per dollar for businesses. But the informal exchange rate in the streets is closer to 170 CUP for every dollar.

My question is: why would ordinary Cubans exchange 170 CUP for 1USD in the street (which is a better rate for the tourist) instead of going to the official exchange bureau which requires less CUP for every dollar?

In: 0

That exchange rate is most likely for banks and they then sell curency at their rates.

Also I assume there is limit of how much one can exchange per day. Eg in Ukraine you cannot buy as many foreign currency as you want.

Because there is often limit how much money you can exchange daily and you need to show an ID. If you’re laundering money or otherwise don’t want to have law or tax authorities take interest why you have tons of spare extra cash to swap on hand you go to currency exchangers who take extra % for the service.