The sudden decline in the euro's value within Cuba's informal exchange market has caught many by surprise, especially after the European currency maintained a stable rate for several months. According to data from the independent platform elToque, which monitors foreign currencies on the island, the euro has dropped to 335 Cuban pesos (CUP) this Sunday, marking a decrease of five pesos from its long-standing rate.
Current Exchange Rates in Cuba
As of December 15, 2024, at 11:48 AM in Cuba, the exchange rates reported by elToque are as follows:
The US dollar (USD) is at 325 CUP, the euro (EUR) is at 335 CUP, and the Freely Convertible Currency (MLC) stands at 270 CUP.
The inconsistency prevalent in this unregulated market continues to affect the currency exchange rates in Cuba. For instance, the dollar's value dropped by two pesos on Saturday, landing at 325 pesos, and has remained steady since. Meanwhile, the MLC has held its value at 270 CUP for several days.
Factors Influencing the Euro’s Decline
Some seasonal factors might be contributing to the euro's depreciation, such as an increase in the currency's supply from individuals. Amidst the ongoing crisis, those receiving remittances from Europe or returning from overseas trips might be selling their euros to acquire Cuban pesos to meet urgent needs. This has led to an imbalance between supply and demand in the informal market, affecting prices.
Cuba's economy is experiencing one of its most challenging periods in recent history, characterized by high inflation and chronic shortages in state markets. Recently, Cuba’s leader Miguel Díaz-Canel acknowledged that 2024 has been a particularly tough year, saying, "we practically live day-to-day."
Impact on Cuban Families
This decrease in currency prices continues to generate anticipation among many families who have come to rely on the informal market as their primary source for acquiring foreign currencies like euros and dollars. These currencies are essential for purchasing food, medicines, and other goods available only in stores operating in MLC.
Economic Challenges and Outlook
Experts caution that the volatility of the informal market reflects deep-seated imbalances in the national economy. Without structural reforms and greater economic openness, improvement seems unlikely, leaving Cubans trapped in a cycle of scarcity and insecurity that appears unending.
Cuban economist Pavel Vidal, based in Colombia, recently noted, "The worsening economic crisis in 2024 has had a paralyzing effect on the informal currency market. The reduced number of tourists, imports, and overall economic activity across all sectors has led to a contraction in the supply and demand for foreign currencies."
Understanding Cuba's Informal Currency Market
What is causing the euro's drop in value in Cuba's informal market?
The euro's decline is likely due to an increased supply from individuals selling euros to meet urgent needs, creating an imbalance between supply and demand.
How does the informal market affect Cuban families?
Cuban families rely heavily on the informal market to acquire essential foreign currencies like euros and dollars, necessary for purchasing vital goods available only in MLC stores.