In the midst of the turbulent economic situation that Cuba is going through, the touch has been the focus of attention due to its publication service of the Representative Rate of the Informal Market (TRMI).
The TRMI has been embroiled in controversy fueled by accusations of foreign exchange market manipulation.
In a recent live broadcastseveral members of our team addressed the allegations, explained the TRMI methodology, and answered user concerns and questions.
On Friday, June 7, 2024, the touch announced that it would temporarily implement rigorous controls to calculate the TRMI with more precision and transparency and confront speculative messages that attempt to intentionally distort and manipulate the reality of the foreign exchange market in Cuba.
Abraham Calás, director of development and innovation at the touchreiterated that from capturing messages to publishing the rate on social networks and the website, the process is automated, which eliminates the possibility of human intervention.
“It is a way to shield the data we give and the first element we use so that no one can change any value,” said Calás.
He also added that each user is uniquely identified to prevent repetition of offers in several groups from affecting the calculation. “We take into account the value of the offer, not the number of messages from one or more users,” she explained.
Calás reported that, in addition, they designed a temporal filter that excludes from the daily sample users who published offers for the first time as of April 1, 2024. This is a response to the instability observed in the market since that time. dates already the appearance of people who could be trying to manipulate the rate with false offers.
«We have a set of users considered VIPs who are reliable in operations because they are dedicated to that. The group allows us to compare its offers with the general values and know if the market moves in the same way, and therefore, protect the rate so that it is as close as possible to the operations that are carried out, “he explained.
Calás added that the TRMI development team has carried out simulations to know the number of users necessary to manipulate the rate. «Until now we have no evidence that that number of users exists. However, we have taken the measure due to the public campaign on social networks both to raise the values of the currencies and to lower them.
The TRMI also has a list from which users with messages that suggest an attempted manipulation are excluded.
The TRMI is confirmed by external calculations and rates
«The TRMI is based on purchase and sale intentions and therefore is a representative rate. However, its fluctuations are consistent with government announcements of changes in direction, policy adjustments and the general trend of the economy,” said José Jasán Nieves, editor-in-chief of the touch.
The credibility of the TRMI, he argued, is evidenced by its growing use and the similarity of its values with other sources, such as with the cryptocurrency market (whose values of confirmed transactions are consistent with currencies in the informal market).
The technical filters are joined by others that range from confirmation with people in Cuba who carry out the operations, to the use of references with other rates with different calculation methods, or rates calculated with real transactions such as Change.cup.
Nieves said that the tool that reflects the messages used for the daily calculation of values allows not only to see the diversity of the messages (offers and platforms collected), but also to go directly to the chat or group in which the purchase offers were published. and sale and contact the bidders there.
Economic science in favor of TRMI
During the broadcast on YouTube, PhD in Economic Sciences Pavel Vidal provided an academic perspective to discredit manipulation theories. Although he recognized the existence of large operators who influence more than others, he argued that the presence of inflection points in the rate (ups and downs) evidences a certain randomness and not coordinated manipulation.
“The informal market in itself should not exist under other conditions, but it is an imperfect substitute for an official exchange market that is not functional because it operates with an overvalued exchange rate and does not offer dollars to those who need it,” Vidal highlighted. “We have to take care of the informal market as long as it is necessary in the economy and what the campaign does is distort the market, which is not good for the operations of the private sector, families, those who send remittances, etc.”
The economist explained that natural language processing to extract trends and data from social networks is a technique widely used in various fields, from electoral analysis to medicine. In the Cuban case, in which transactions occur informally and are announced on social networks, the methodology has proven to be functional.
A central point of the discussion was the lack of government transparency. Vidal criticized the scarcity of official statistics and argued that the information vacuum encourages speculation and conspiracy theories.
One of the most recurring questions from users referred to the change in values at times when there should be no messages, such as early morning.
Abraham Calás explained that even when the rate values are displayed in real time, there is a “message queue” (the offers that are captured and not processed at the same time). He exemplified that “the queue” can have up to 20,000 or 30,000 messages waiting and when they are added to the database after being processed then the values change.
Regarding the forecasts, Pavel Vidal, also a professor at the Javeriana University of Cali, said that the exchange rate, “in a medium-term trend, is going to rise because the Government is financing an excessive fiscal deficit with the issuance of Cuban pesos that causes the current three-digit inflation and fuels the depreciation of the CUP.
The doctor in Economic Sciences also insisted that statistically it has been proven that visits to the TRMI at the site of the touch They do not influence or determine the values of the exchange rate, so stopping publishing is not the solution for the Cuban peso to appreciate.
“On the contrary, the existence of a reference reduces volatility, organizes the trajectory of the exchange rate and addresses the problem of information asymmetry by democratizing it,” explained Vidal.
As Abraham Calás explained, when developing the algorithm, the procedure that a person would follow when searching for information about prices in said market was replicated. The process includes visiting several groups and calculating a core value to guide your negotiations. The methodology not only ensures accuracy but also reflects the actual practices of users in the market.
The rate algorithm, by automating and optimizing this search, makes the process more efficient and democratic. By eliminating the need to manually traverse multiple sources, the algorithm facilitates equitable access to accurate and up-to-date information. This democratization of information not only saves time, but also levels the playing field for all market participants, regardless of their experience or resources.
The panelists insisted that in recent weeks several people have attributed the temporary appreciation of the peso to their “efforts,” while several pages and profiles publish an informal market rate without foundation or methodology.
“By will and desire, the economic conditions that have caused inflation and have depreciated the Cuban peso will not change,” they reflected.
Given the recent discussions surrounding the TRMI, the Cuban Government has chosen to “take its hands off” the problem and has preferred to look for scapegoats such as the touch instead of addressing the structural causes of inflation and peso depreciation.
