As the year draws to a close, the U.S. dollar has shown a slight recovery in Cuba's informal market, reaching 304 Cuban pesos (CUP) as reported on Tuesday, December 31. Meanwhile, the euro remained stable at 310 CUP, and the Freely Convertible Currency (MLC) stayed at 250 CUP, showing no significant changes from previous days.
This uptick in the dollar, which increased by four pesos in the last 24 hours, highlights the volatile nature of Cuba's informal market. The high demand for foreign currency is driven by an economy plagued by resource scarcity and the limited offerings of the official banking system.
Current Exchange Rates
Tuesday, December 31, 2024 - 12:09 PM in Cuba:
- USD to CUP exchange rate according to elTOQUE: 304 CUP
- EUR to CUP exchange rate according to elTOQUE: 310 CUP
- MLC to CUP exchange rate according to elTOQUE: 250 CUP
The evolution of these exchange rates remains a crucial indicator for Cubans, who rely on these currencies to purchase goods in MLC stores or conduct transactions on international platforms.
Following several months of higher values, the informal market's currency rates began to drop after the Cuban government's announcement of a more flexible official exchange rate to be implemented in 2025, which will respond to market supply and demand dynamics.
"This could coincide, as it has in other instances, with the arrival of residents from abroad who come to celebrate the end of the year with family. The influx of émigrés to the island increases currency circulation and thus, supply," noted elTOQUE in a recent article, offering an alternative explanation for the recent unexpected decline in currency values in Cuba.
Currency Conversion Rates
Here are the current conversions for euros and U.S. dollars to Cuban pesos (CUP) as of December 29:
U.S. Dollar (USD) to Cuban Peso (CUP):
- 1 USD = 304 CUP
- 5 USD = 1,520 CUP
- 10 USD = 3,040 CUP
- 20 USD = 6,080 CUP
- 50 USD = 15,200 CUP
- 100 USD = 30,400 CUP
Euros (310 CUP per euro):
- 1 EUR = 310 CUP
- 5 EUR = 1,550 CUP
- 10 EUR = 3,100 CUP
- 20 EUR = 6,200 CUP
- 50 EUR = 15,500 CUP
- 100 EUR = 30,000 CUP
Anticipation for "Floating Exchange Rate"
On December 18, the Cuban government announced plans to introduce a floating official exchange rate, aligned with market supply and demand, in a bid to compete with the informal market.
Details and the implementation date of this rate remain unknown, but it aims to regulate the currency market within an environment where the informal currency market currently prevails.
This measure is part of a partial dollarization of the economy, impacting strategic sectors such as wholesale and retail trade, tourism, and foreign commerce. It will also permit the use of cash dollars in sectors like pharmacies, airports, and agricultural producers involved in exports.
In an economy characterized by inflation and the failure of previous economic policies, the regime is attempting—once more—to regain control over a landscape where the rules of the informal market largely define the economic reality for the population.
Understanding Cuba's Currency Market Dynamics
Why is the U.S. dollar gaining strength in Cuba's informal market?
The U.S. dollar is gaining strength due to high demand for foreign currency amidst resource scarcity and limited official banking options in Cuba.
How does the Cuban government's new exchange rate policy affect the market?
The new policy aims to introduce a floating exchange rate responsive to supply and demand, potentially reducing the dominance of the informal market.
What impact does the informal market have on Cuba's economy?
The informal market significantly influences Cuba's economy, as it often dictates the real value of foreign currencies, affecting everyday transactions for citizens.