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The informal currency market in Cuba has seen a significant rise in prices over the past week, reflecting increasing economic uncertainty and high demand for foreign currencies.
According to recent data processed by the independent platform elTOQUE, the US dollar (USD) reached a value of 315 Cuban pesos (CUP), while the euro (EUR) rose to 320 CUP.
The Freely Convertible Currency (MLC) remained at 250 CUP, reflecting a time of significant uncertainty regarding the future of this monetary entity implemented by the Cuban regime in July 2020 as a mechanism for attracting foreign currency.
Exchange rate today, Saturday, January 4, 2025 - 03:07 in Cuba:
- Dollar exchange rateUSD to CUP"According to"elTOQUEIt seems that there is no text provided for translation. Please provide the text you'd like me to translate, and I'll be happy to assist you315 CUP translates directly to "315 CUP" in English
- Exchange rate of the euroEUR to CUP"According to"elTOQUEIt seems you didn't provide any text to translate. Please share the text you'd like translated, and I'll be happy to help!320 CUP
- Exchange rate of theMLC to CUPThe translation of "según" to English is "according to"elTOQUEIt seems that there is no text provided for translation. Please share the text you would like to have translated, and I'll be happy to assist you!250 CUP translates to "250 Cuban Pesos."
This new increase in the price of foreign currencies in the Cuban informal market is closely linked to the measures of "partial dollarization" implemented by the Cuban regime.
Evolution of the exchange rate over time
In mid-December 2024, the government approved regulations permitting the use of the U.S. dollar in sectors such as wholesale and retail trade, as well as for paying tariffs and foreign trade services.
This partial dollarization has intensified the demand for foreign currency among the population, which seeks to protect its savings and access goods and services now offered in dollars, as is the case in the new supermarket opened in the Miramar neighborhood of the capital.
Additionally, the announcement of a new exchange rate regime with a more flexible exchange rate, scheduled for 2025, has raised expectations of a devaluation of the Cuban peso, further driving the acquisition of foreign currencies as a safe haven for value.
The fear of a further devaluation of the Cuban peso and the ongoing shortage of foreign currency in the state banking system drives the demand for it in the informal Cuban market.
The week began with a rate of 300 CUP per dollar, but the figure quickly rose, reaching 310 CUP on Friday and closing the week at 315 CUP. The euro showed a similar trend, increasing from 310 CUP to its current value of 320 CUP.
This upward trend directly affects Cubans who rely on remittances sent by relatives abroad, as they are receiving fewer pesos for the same amount of foreign currency.
For their part, prices in MLC stores, which are governed by the official exchange rate of the Central Bank, starkly contrast with the reality of the informal market, further exacerbating economic inequalities.
The shortage in these stores that accept MLC once again highlights the strategy of the Cuban regime for generating foreign currency, implementing policies that have consistently harmed the recipients of family remittances in euros and dollars.
Experts warn that the situation could worsen if effective measures are not implemented to stabilize the value of the Cuban peso. In the meantime, citizens continue to face an uncertain economic landscape, characterized by inflation and a loss of purchasing power.
The sustained increase in currency prices reflects not only market volatility but also the desperation of a population seeking to protect their incomes in the face of a crisis-ridden economy.
In summary, the policies of partial dollarization and the exchange rate reforms announced by the Cuban regime have directly influenced the rising prices of foreign currencies in the informal market, reflecting economic uncertainty and the pursuit of financial stability by a populace that fears the neoliberal shock that the "continuity" government continues to implement.
Frequently Asked Questions about Dollarization and the Currency Market in Cuba
Why have currency prices in Cuba skyrocketed recently?
The price of currencies has surged due to the partial dollarization implemented by the Cuban regime, which has increased the demand for dollars and euros. Additionally, expectations of devaluation of the Cuban peso have led the population to seek out foreign currencies as a safe haven for value.
What impact does partial dollarization have on the Cuban economy?
Partial dollarization has enabled the use of the dollar in sectors such as retail and wholesale, which has heightened the demand for foreign currency and increased economic inequalities, as many people rely on the informal market to obtain the dollars necessary to access certain goods and services.
What is the current value of the dollar and the euro in the Cuban informal market?
Currently, the dollar is trading at 315 Cuban pesos (CUP) and the euro at 320 CUP in the informal Cuban market, reflecting high demand and fears of a devaluation of the Cuban peso.
What is the Freely Convertible Currency (MLC) and what is its current situation?
The Freely Convertible Currency (MLC) is a virtual currency used in specific stores in Cuba. Currently, its value in the informal market is 250 CUP. The lack of product availability in stores that operate with MLC highlights the regime's ineffectiveness in ensuring access to basic goods.
How are exchange rates expected to evolve in Cuba?
Exchange rates could continue to be volatile due to economic uncertainty and the announced exchange rate reforms. The introduction of a more flexible exchange rate might aim to stabilize the market, but its impact will depend on effective implementation and the response from the informal market.
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