The behavior of the informal currency market in Cuba over the past 72 hours clearly indicates its instability, as well as the accelerated decline in the value of the national currency and the purchasing power of millions of Cubans.
Sharp Fluctuations in Currency Values
After three weeks of a notable drop in the value of reference currencies in the informal market, it took just four days of trend reversal to push the USD, EUR, and freely convertible currency (MLC) back to levels close to their record highs set in May.
On Friday, these currencies saw significant price increases compared to the previous day, with rises ranging from 10 to 30 pesos. By Saturday, the surge was even more pronounced for some currencies, creating a dizzying escalation that leaves workers and pensioners, who earn in Cuban pesos, breathless.
The USD's 30-peso increase from Friday repeated on Saturday, reaching 380 Cuban pesos (CUP), just 15 pesos shy of its all-time high set on May 10.
MLC and Euro Show Significant Gains
The MLC, a currency implemented by the Cuban regime for electronic transactions and generally more stable, also saw a spectacular increase on Saturday. While Friday's rise was 10 pesos, Saturday's jump was 20 pesos, doubling in less than 24 hours and bringing its value to 300 CUP, ten pesos below its record high on May 14.
However, the Euro saw the most dramatic increase, skyrocketing by 45 pesos in a single day and reaching 400 CUP, close to its historical peak of 402.5 CUP also achieved on May 10.
Current Exchange Rates as of 08/06/2024 - 6:49am in Cuba
According to elTOQUE, the exchange rates are as follows:
- USD to CUP: 380 CUP
- EUR to CUP: 400 CUP
- MLC to CUP: 300 CUP
Alternative platform rates:
- USD: Buy at 355 CUP, Sell at 378 CUP
- EUR: Buy at 365 CUP, Sell at 390 CUP
- MLC: Buy at 289 CUP, Sell at 296 CUP
In light of this chaotic scenario, the independent media outlet elTOQUE, which monitors the fluctuations of currency values in the informal market, reported that it has strengthened controls to calculate the representative rate, amid growing suspicions of attempts to inflate or crash values with false announcements.
The independent media pointed to a campaign by “government actors associated with State Security and propagandists of the Communist Party” who, since April, have tried to delegitimize the outlet and its methodology for calculating the rate. They noted that “private sector actors claim they can coordinate to drive the appreciation of the Cuban peso.”
“It seems that the intention is to generate enough noise so that the spaces where the informal currency market has been articulated—as a solution to the Cuban state's inaction on exchange rate policy—cease to be credible and functional,” lamented the media outlet.
Understanding Currency Market Instability in Cuba
In this section, we address common questions surrounding the recent fluctuations in the informal currency market in Cuba.
Why is the value of the Cuban peso declining so rapidly?
The rapid decline in the value of the Cuban peso is attributed to economic mismanagement, lack of foreign investment, and the government's failure to implement effective monetary policies.
What impact does the currency fluctuation have on the daily lives of Cubans?
Currency fluctuations significantly affect the purchasing power of Cubans, making it harder for them to afford basic goods and services, and leading to greater economic hardship.
How reliable are the exchange rates provided by independent media like elTOQUE?
Independent media like elTOQUE aim to provide accurate and representative exchange rates, often strengthening their controls to counteract attempts at market manipulation by both governmental and private actors.