After 48 hours of stability in the average exchange rate of foreign currencies in the informal market, the value of the dollar and the Freely Convertible Currency (MLC) fell this Thursday. The American dollar decreased by five pesos, now standing at 335 CUP per dollar.
As of 7:00 a.m. (local time) on July 11, the MLC is valued at 293 pesos, two units less than the previous day. The euro remains unchanged at 350 pesos, a rate that has been stable for several days.
Government Imposes Price Caps on Essential Goods
The recent dip in the dollar and MLC marks the first movement in the informal market following the Cuban government's announcement of price caps on six high-demand essential goods, a decision published in the Official Gazette on Monday.
The Resolution 225/2024 from the Ministry of Finance and Prices sets maximum retail prices for the following products:
- Chicken pieces at 680 pesos per kg
- Edible oils (excluding olive oil) at 990 pesos per liter
- Powdered milk at 1,675 pesos per kg
- Pasta at 835 pesos per kg
- Sausages at 1,045 pesos per kg
- Powdered detergent at 630 pesos per kg
The government presented the resolution as an effort to mitigate the impact of inflation on consumers. To support this, it has removed customs duties on the importation of these products for the private sector. The regime claims that these price caps consider acquisition costs, marketing expenses, merchants' profit, and sales tax. However, SMEs and some economists have criticized the measure.
Critics argue that price controls can have negative consequences and suggest that the market should self-regulate through supply and demand. Despite these criticisms, the Ministry of Finance and Prices defends the measure as a "temporary regulation" aimed at curbing price increases and inflation, without mentioning the potential for shortages that this policy could cause.
Current Exchange Rates
The informal exchange rates in Cuba, which are not officially recognized or backed by any financial or governmental entity, are as follows for July 11, 2024, at 7:25 a.m.:
USD to CUP:
- 1 USD: 335 CUP
- 5 USD: 1,675 CUP
- 10 USD: 3,350 CUP
- 20 USD: 6,700 CUP
- 50 USD: 16,750 CUP
- 100 USD: 33,500 CUP
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 series of economic measures to "correct distortions and reinvigorate the economy." He acknowledged that prices would remain high but assured that "abusive or speculative prices" would not be tolerated.
Understanding Cuba's Informal Currency Market
Here are some frequently asked questions to help you understand the current situation in Cuba's informal currency market and the implications of government measures.
What are the current exchange rates for USD and EUR in Cuba's informal market?
As of July 11, 2024, the exchange rate for USD is 335 CUP per dollar, and for EUR, it is 350 CUP per euro.
What products are affected by the Cuban government's price caps?
The price caps affect chicken pieces, edible oils (excluding olive oil), powdered milk, pasta, sausages, and powdered detergent.
Why did the Cuban government implement price caps?
The government implemented price caps to mitigate the impact of inflation on consumers and to prevent abusive or speculative pricing.
What are the criticisms of the price cap policy?
Critics argue that price caps can lead to negative consequences, such as shortages, and believe that the market should self-regulate through supply and demand.