For the first time since it reached 300 pesos in February, the US dollar is now trading at 298 Cuban pesos (CUP) in the informal market, according to the reference rate published by the independent media outlet elToque.
This figure marks a milestone as it falls below 300 CUP for the first time in nearly a year – since February 13, 2024 – after many ups and downs but always remaining above that threshold.
The decline occurs within an economic context characterized by significant fluctuations in the major currencies circulating in the country. The euro, for its part, remains at 300 CUP, while the Free Convertible Currency (MLC) drops to 250 CUP.
In a challenging economic context for Cuba, characterized by inflation and shortages of essential goods, this decline reflects a growing frustration among the private sector due to recent restrictions imposed by the government.
Particularly following the implementation of Resolution 56/2024 from the Ministry of Domestic Trade, which severely restricts wholesale marketing, thereby jeopardizing the survival of Micro, Small and Medium Enterprises (Mipymes), non-agricultural cooperatives (CNA), and self-employed workers (TCP).
The new regulations require small and medium-sized enterprises (Mipymes) and cooperatives to sell exclusively through state-owned companies or government-controlled distributors.
Additionally, it establishes strict deadlines of 90 days to update licenses and 120 days to liquidate wholesale inventories. Non-compliance results in severe penalties, including fines, seizures, and the cancellation of operating licenses.
Therefore, the current decrease could be temporary due to the inherent volatility of the informal market and the overall economic conditions of the island. Additionally, external factors such as the arrival of remittances or political decisions could influence the exchange rate of the dollar in the short term.
Meanwhile, Cubans continue to face the challenges of a crisis-stricken economic system, where the dollar remains a headache for many families who cannot access food as the year comes to a close.
Recent reports indicate that the price of pork has exceeded 1,400 pesos in the informal market, making it a luxury for most of the population, even though it is a staple food for celebrations.
Additionally, other staple components of the Cuban diet have also seen significant increases.
Creole rice is sold at approximately 200 pesos per pound, while black and red beans can reach up to 450 pesos per pound.
These prices are prohibitive, considering that the minimum wage in Cuba is 2,100 pesos per month.
The situation worsens with the removal of subsidies for the basic food basket, leaving many families without access to essential products at affordable prices. Although the government recently confirmed that the ration book is guaranteed until 2025.
In this context, the decline of the dollar in the informal market does not translate into a tangible improvement for the population.
The purchasing power of Cubans continues to decline, and the New Year's festivities are overshadowed by uncertainty and the inability to uphold deeply rooted culinary traditions.
Frequently Asked Questions about the Decline of the Dollar and the Economic Situation in Cuba
Why has the value of the dollar fallen in the informal Cuban market?
The value of the dollar has fallen in the informal Cuban market due to recent restrictions and economic policies imposed by the government, such as Resolution 56/2024, which limits wholesale trading and impacts the private sector. Furthermore, expectations surrounding the implementation of a more flexible official exchange rate may be contributing to this decline.
How does the fall of the dollar affect the purchasing power of Cubans?
Despite the dollar falling to 298 CUP, this has not resulted in a tangible improvement for the Cuban population, as inflation and the scarcity of essential goods continue to restrict their purchasing power. Prices for basic products remain prohibitive, making access to food and other essential items difficult.
What impact does Resolution 56/2024 have on small and medium enterprises (SMEs) and the informal market?
Resolution 56/2024 imposes severe restrictions on small and medium-sized enterprises (SMEs) and cooperatives, forcing them to sell exclusively through state-owned companies. This jeopardizes the survival of the private sector and affects the dynamics of the informal market, creating uncertainty and frustration among Cuban entrepreneurs.
What is the Freely Convertible Currency (MLC) and what role does it play in the Cuban economy?
The Freely Convertible Currency (MLC) is a virtual currency used in specific stores in Cuba, and it is currently trading at 250 CUP in the informal market. The MLC is essential for accessing certain products on the island, and its use highlights the limitations of the Cuban economic system and the reliance on the informal market to meet basic needs.
How is the removal of subsidies on the basic basket affecting Cuban families?
The elimination of subsidies for basic goods has left many Cuban families without access to essential products at affordable prices, exacerbating the economic crisis. This situation is compounded by inflation and the high costs of food items, such as pork and beans, which have become unattainable luxuries for most of the population.
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