The aftermath of a widespread blackout and Hurricane Oscar has left many wondering if the informal currency market in Cuba has been affected. Surprisingly, the answer is no. The exchange rates for the three major currencies in Cuba have shown no fluctuations in recent days, as reported by the independent outlet elTOQUE, which tracks the buying and selling prices of dollars, euros, and the Cuban Convertible Peso (MLC) on social media.
At 10:00 a.m. on October 22, the dollar remained at 325 CUP and the euro at 340 CUP. The MLC held steady at 265 CUP, a rate unchanged since its sudden drop by five pesos on October 9. This stagnation is understandable given the recent connectivity issues faced by the population, yet, in reality, the currencies had already entered a phase of stability before these events.
Exchange Rate Overview
By early October, there were hints of potential movement in currency prices, but since October 12, when the dollar rose to 325 CUP, the rates have settled. Over the past ten days, no significant price changes have been observed, according to elTOQUE's monitoring.
As of 10:15 a.m. on October 22, 2024, the exchange rates reported by elTOQUE are as follows:
- USD to CUP: 325 CUP
- EUR to CUP: 340 CUP
- MLC to CUP: 265 CUP
The median rates published today indicate no impending changes. Meanwhile, discussions on social media continue regarding whether the informal market exchange rate should rise or fall, reflecting varied interests and circumstances within Cuban society.
Why Some Advocate for Higher Exchange Rates
Remittances and Purchasing Power: Those receiving remittances in dollars or euros benefit from higher exchange rates, as they can convert these currencies into more Cuban pesos, enhancing their purchasing power in an economy where informal market prices are steep.
Private Investments and Businesses: Entrepreneurs and small business owners rely on the informal currency market to acquire dollars and euros necessary for importing goods or accessing international markets. A higher exchange rate could attract more foreign currency into the country and stimulate investments, albeit increasing operational costs.
Speculation and Quick Profits: Some individuals act as speculators in the currency market, buying and selling dollars to gain quick profits as currency values fluctuate. If the dollar value rises, those stockpiling dollars can sell them at higher prices for significant returns.
Arguments for Lower or Stable Currency Rates
Inflation and Rising Living Costs: When the informal market dollar rate increases, so do the prices of imported goods and many items in the Cuban market. This impacts most Cubans who lack access to dollars or remittances, making the cost of living increasingly burdensome with salaries paid in Cuban pesos.
Impact on State Enterprises: The Cuban government and state-owned enterprises, which operate in pesos, struggle to obtain foreign currencies at reasonable rates when the informal market exchange rate is high. This complicates the importation of essential goods and stocking MLC stores, worsening shortages of basic necessities.
Growing Economic Inequality: A more expensive dollar in the informal market favors those with foreign currency access, mainly families with overseas ties or remittance recipients, exacerbating challenges for the majority of Cubans relying solely on peso incomes. This deepens economic inequality.
Pressure on Peso Salaries: In an economy where the dollar price keeps rising, Cuban peso salaries rapidly lose value. This diminishes the purchasing power for most people dependent on state wages, affecting their quality of life.
Currency Conversion Rates
Here are the current conversion rates for various denominations of U.S. dollars and euros to Cuban pesos (CUP) based on the October 22 exchange rates:
- 1 USD = 325 CUP
- 5 USD = 1,625 CUP
- 10 USD = 3,250 CUP
- 20 USD = 6,500 CUP
- 50 USD = 16,250 CUP
- 100 USD = 32,500 CUP
- 1 EUR = 340 CUP
- 5 EUR = 1,700 CUP
- 10 EUR = 3,400 CUP
- 20 EUR = 6,800 CUP
- 50 EUR = 17,000 CUP
- 100 EUR = 34,000 CUP