As Sunday dawns in Cuba, the black market for foreign currency remains unchanged for the third consecutive day, following a week characterized by consistent increases in the value of the Freely Convertible Currency (MLC). The US dollar is still valued at 340 CUP, with the euro at 345 CUP. Meanwhile, the MLC holds steady at 270 CUP, according to the daily report from elToque, which tracks the fluctuations in currency exchange.
The virtual currency, used by the regime in select stores and viewed by some as on the brink of obsolescence, has risen by a total of 25 pesos since February 14. As of February 23, 2025, at 11:14 a.m. in Cuba, the exchange rates stand as follows: the USD to CUP rate is 340 CUP, the EUR to CUP rate is 345 CUP, and the MLC to CUP rate is 270 CUP, according to elToque.
Understanding the Recent Rise of the MLC
The unexpected appreciation of the MLC in recent days has puzzled both Cuban citizens and economic analysts. Despite fewer stores accepting this currency, its value has paradoxically increased, defying usual market expectations in the face of low demand. Economist Pavel Vidal, speaking to elToque, suggested that this might be a "temporary correction" following a significant devaluation earlier in the year. Vidal, from the Cuban Monetary and Financial Observatory (OMFi), noted that such adjustments are common after drastic changes in currency rates. Additionally, price rigidity in a scarcity-stricken market promotes arbitrage activities, potentially boosting MLC demand in the short term.
Social media users have proposed alternative explanations for this phenomenon. The shortage of products in state-run MLC-accepting stores might play a crucial role. One user highlighted that items purchased in MLC and resold in Cuban pesos at the current exchange rate can yield substantial profits.
Tobacco products have been identified as a key factor. Their low price elasticity means smokers continue purchasing regardless of cost, with some users claiming profits can double the original MLC purchase price. Other goods such as eggs, yogurt, sausages, detergent, and soap are also driving demand for this currency due to the lucrative resale opportunities in Cuban pesos.
Despite the recent uptick, Vidal believes these fluctuations do not alter the long-term downward trend of the MLC in the informal market over the past two years. Concurrently, the Cuban regime is gradually moving towards partial dollarization of sales, accepting cash payments and card transactions with VISA, MasterCard, and the government-managed Clásica card.
MLC's Decline Amidst Changing Payment Systems
It is hard to overlook the decline of the MLC, as evidenced by the reopening of the Infanta and Santa Marta Market in Havana last week. Although it previously allowed MLC transactions, these are no longer accepted. Payments now must be made using cards such as VISA, MasterCard, MIR, and prepaid cards issued by BANDEC, AIS, Viajero, and Clásica, the latter offering a 5% discount on purchases.
In addition to these locations, the regime has authorized over a dozen wholesale and retail outlets to operate in foreign currency, with eight connected to the MINCIN business system.
Frequently Asked Questions About the Cuban Exchange Market
Why has the MLC increased in value recently?
The recent increase in the MLC's value could be a temporary correction following a previous drop. Factors like market scarcity, price rigidity, and opportunities for arbitrage may also be contributing to its demand.
What are the current exchange rates for USD, EUR, and MLC in Cuba?
As of now, the exchange rate for the US dollar is 340 CUP, the euro is 345 CUP, and the MLC stands at 270 CUP, according to elToque.
What payment methods are currently accepted in Cuban markets?
Currently, Cuban markets accept payments via VISA, MasterCard, MIR, and government-issued cards like Clásica, which offers a 5% discount on purchases.