Inertia and stability have characterized the response of the informal currency market to the Cuban government's recent price cap on six high-demand basic products.
For the second consecutive day this Wednesday, key currencies have shown a momentary stability, with no changes in their average selling prices, according to independent media outlet elToque. The U.S. dollar, the euro, and the Freely Convertible Currency (MLC) have maintained their prices from the last two days. As of 7:00 a.m. local time on July 10th, the dollar remains at 340 pesos, the euro at 350, and the MLC at 295 CUP.
Current Exchange Rates in Cuba
Exchange rate as of 7:25 a.m. on July 10, 2024:
USD to CUP rate according to elToque: 340 CUP.
EUR to CUP rate according to elToque: 350 CUP.
MLC to CUP rate according to elToque: 295 CUP.
The informal exchange rates provided here are not officially recognized or backed by any financial or governmental entity. The Ministry of Finance and Prices (MFP) has stated that "prices cannot be lowered arbitrarily," addressing online concerns about the price cap on six products sold by the private sector.
According to an MFP representative, reducing prices arbitrarily would harm producers and merchants, affecting the future availability of these products. However, this explanation contradicts Resolution 225, published on July 8, 2024, which sets maximum retail prices for six products.
The MFP representative argued that prices recover the costs and expenses of products, whether imported or domestic. Despite this, the measure has been criticized by entrepreneurs and economists, who warned of the negative consequences of price caps and suggested that the market should regulate itself through supply and demand.
Despite these criticisms, the MFP defends the "temporary regulation" as a means to curb price increases and inflation, without addressing the potential shortages that could result from this policy.
Government Imposes Price Caps on Six Essential Products
The Cuban government announced on Monday the implementation of price caps on six essential high-demand products through a resolution published in the Official Gazette of Cuba.
Resolution 225/2024 from the Ministry of Finance and Prices establishes maximum retail prices for the following products: cut chicken (680 pesos per kg); edible oils except olive oil (990 pesos per liter); powdered milk (1,675 pesos per kg); pasta (835 pesos per kg); sausages (1,045 pesos per kg); and powdered detergent (630 pesos per kg). The government presented the resolution as an effort to mitigate the impact of inflation on consumers and eliminated the customs duty on imports of these products for the private sector.
The regime indicated that the price cap considers acquisition costs, marketing costs, merchant profits, and sales tax. However, SMEs and some economists have spoken out against the measure.
Equivalents of each available bill of euros and U.S. dollars to Cuban pesos (CUP) according to the exchange rates on Wednesday, July 10:
U.S. Dollar (USD) to CUP:
1 USD: 340 CUP.
5 USD: 1,700 CUP.
10 USD: 3,400 CUP.
20 USD: 6,800 CUP.
50 USD: 17,000 CUP.
100 USD: 34,000 CUP.
Euros (EUR) to CUP:
1 EUR: 350 CUP.
5 EUR: 1,750 CUP.
10 EUR: 3,500 CUP.
20 EUR: 7,000 CUP.
50 EUR: 17,500 CUP.
100 EUR: 35,000 CUP.
200 EUR: 70,000 CUP.
In March, Miguel Díaz-Canel promised a package of economic measures to "correct distortions and boost the economy." He stated that prices would remain high but that "abusive or speculative prices" would not be allowed.
Frequently Asked Questions about Cuba's Currency Market
Below are some frequently asked questions regarding the current state of Cuba's currency market and the government's recent price cap measures.
Why did the Cuban government impose price caps on certain products?
The Cuban government imposed price caps on six essential products to mitigate the impact of inflation on consumers. This measure is part of a broader effort to control rising prices and economic instability.
What is the current exchange rate for USD and EUR in Cuba's informal market?
As of July 10, 2024, the exchange rate for USD is 340 CUP, and for EUR, it is 350 CUP, according to elToque.
How has the informal currency market reacted to the government's price cap measures?
The informal currency market has shown a momentary stability with no significant changes in the average selling prices of key currencies like the USD, EUR, and MLC.
What are the criticisms against the price caps imposed by the Cuban government?
Entrepreneurs and economists have criticized the price caps, warning of negative consequences such as reduced availability of products and market distortions. They suggest that the market should regulate itself through supply and demand.