The informal currency market in Cuba has witnessed another surge as the exchange rate for the U.S. dollar (USD) has matched that of the euro (EUR), with both now valued at 325 Cuban pesos (CUP). Data from the independent outlet elTOQUE reveals that on Monday, January 6, 2025, the Freely Convertible Currency (MLC) remains steady at 250 CUP, highlighting a significant disparity compared to other currencies. This situation underscores the public's uncertainty regarding a currency that seems destined to vanish amidst the "partial dollarization" led by Miguel Díaz-Canel's "continuity" government.
Exchange Rates for Monday, January 6, 2025 - 06:07 in Cuba:
- USD to CUP according to elTOQUE: 325 CUP
- EUR to CUP according to elTOQUE: 325 CUP
- MLC to CUP according to elTOQUE: 250 CUP
The ongoing increase in the value of the U.S. dollar continues a trend observed in recent days. Previous reports indicated a 5 CUP rise in the dollar and euro within just 24 hours, demonstrating mounting pressure in the informal currency exchange market.
Factors Influencing the Increase
The volatility in currency prices in Cuba is closely linked to several economic and social factors. A notable recent development is the opening of a new supermarket in Havana, which exclusively accepts payments in foreign currencies such as dollars and euros. This event marks a significant milestone in the dollarization process announced by the Cuban regime.
This trend has amplified the demand for strong currency, as an increasing number of essential goods are available only in stores that operate with foreign currencies and do not accept MLC, according to multiple social media reports. Furthermore, the dollarization of the Cuban economy has reignited uncertainty, as a large portion of essential transactions now require foreign currency, relegating the CUP and MLC to lesser roles, diminishing their purchasing power.
Impact on the Cuban Population
The relentless rise in exchange rates directly impacts the purchasing power of Cubans, who heavily rely on the informal market to obtain dollars, euros, or MLC for purchasing food, medicine, or basic supplies. In this context, many families survive on remittances sent from abroad, whose value in CUP has significantly increased in recent times.
Cuba's economy is grappling with structural challenges that intensify the currency crisis. A combination of inflation, shortages, and the absence of a functional official exchange market is leaving citizens in an extremely vulnerable position.
Understanding Cuba's Currency Crisis
Why is the U.S. dollar increasing in Cuba's informal market?
The increase in the U.S. dollar's value is driven by heightened demand for foreign currencies due to Cuba's partial dollarization and the availability of essential goods only in stores accepting dollars and euros.
How does the exchange rate rise affect Cuban citizens?
The soaring exchange rates diminish the purchasing power of Cubans, forcing many to rely on the informal market to access necessary foreign currencies for purchasing essential goods.
What role do remittances play in Cuba's economy?
Remittances are crucial for many Cuban families, providing necessary financial support, especially as their value in CUP increases amidst the currency crisis.