In recent hours, only the euro, one of the three key currencies in Cuba's informal market, has seen a price change. As of 10:00 a.m. local Cuban time this Tuesday, the European currency is valued at 341 CUP, a decrease of one peso from the previous day. Meanwhile, the U.S. dollar remains stable at 340 CUP, a rate it has maintained since the past weekend. Equally unchanged today is the Freely Convertible Currency (MLC), which continues to be valued at 240 CUP, a full 100 pesos less than the dollar.
These fluctuations highlight the inherent volatility of the informal market in the country, driven by the increasing demand for foreign currencies among the population. This demand has intensified following the opening of stores that accept cash payments in foreign currencies and the announcement of an upcoming official floating exchange rate.
Exchange rates for January 14, 2025, at 10:19 a.m. in Cuba:
- USD to CUP according to elTOQUE: 340 CUP.
- EUR to CUP according to elTOQUE: 341 CUP.
- MLC to CUP according to elTOQUE: 240 CUP.
Potential Impact of the New "Floating Exchange Rate"
The introduction of a floating exchange rate in Cuba, announced by Prime Minister Manuel Marrero in December 2024, aims to rival the informal currency market. However, this initiative faces skepticism from experts and numerous structural challenges.
The official floating rate intends to align more closely with the informal market rate, which is currently more competitive. This alignment could encourage economic actors to transition to the formal market. Nevertheless, economist Pavel Vidal recently noted that without significant economic reforms and macroeconomic stabilization measures, it will be challenging to displace the informal market, which has become increasingly sophisticated and digitalized.
Vidal estimates that the formal and informal markets will likely coexist for a prolonged period due to the former's challenges in credibility, infrastructure, and currency flow. The lack of sufficient technological and logistical capacity in banks and exchange houses could sustain the preference for the informal market.
Inflationary pressures also pose a challenge, as the absence of clear policies to control inflation and improve the economy could undermine trust in the formal system.
In conclusion, some experts believe that implementing a floating exchange rate could represent progress in Cuba's economic policy. However, its success hinges on economic and fiscal restructuring, the Central Bank's transparency and autonomy, and the integration of the floating rate into a unified monetary strategy. Without these conditions, the informal market is unlikely to disappear in the short term, remaining a key player in Cuba's currency landscape.
Meanwhile, the daily "dance" of Cuba's informal currency market continues.
Currency Conversion Rates for Euros and U.S. Dollars to Cuban Pesos (CUP)
Here are the equivalencies for euro and U.S. dollar bills in Cuban pesos, based on exchange rates as of January 14:
- 1 USD: 340 CUP.
- 5 USD: 1,700 CUP.
- 10 USD: 3,400 CUP.
- 20 USD: 6,800 CUP.
- 50 USD: 17,000 CUP.
- 100 USD: 34,000 CUP.
- 1 EUR: 341 CUP.
- 5 EUR: 1,705 CUP.
- 10 EUR: 3,410 CUP.
- 20 EUR: 6,820 CUP.
- 50 EUR: 17,050 CUP.
- 100 EUR: 34,100 CUP.
Understanding Cuba's Currency Market Challenges
What is the current exchange rate for the U.S. dollar in Cuba's informal market?
As of January 14, 2025, the U.S. dollar is exchanged at 340 CUP in Cuba's informal market.
Why is there a demand for foreign currencies in Cuba?
The demand for foreign currencies in Cuba has risen due to the opening of stores that accept foreign currency payments and the anticipation of an official floating exchange rate.
What are the challenges of implementing a floating exchange rate in Cuba?
Implementing a floating exchange rate in Cuba faces challenges such as lack of infrastructure, inflationary pressures, and the need for economic reforms and macroeconomic stabilization.