In the last few hours, only one of the three benchmark currencies in the Cuban informal market, the euro, has experienced price changes.
At 10:00 a.m. (Cuban local time) this Tuesday, the European currency is quoted at 341 CUP, one peso less than the previous day.
In the case of the dollar, the US currency remains valued at 340 CUP, a rate that has been stable since last weekend.
Also unchanged today, but one hundred pesos below the dollar, the Freely Convertible Currency (MLC), which is quoted for the second consecutive day at 240 CUP.
These variations confirm the volatility that characterizes the informal market on the island, reflecting the increasing demand for foreign currency by the population, especially following the recent opening of stores that accept cash payments in foreign currency and the announcement of an upcoming official floating exchange rate.
Exchange Rate Evolution
Exchange rate today 01/14/2025 - 10:19 a.m. in Cuba:
Exchange rate of the dollar USD to CUP according to elTOQUE: 340 CUP.
Exchange rate of the euro EUR to CUP according to elTOQUE: 341 CUP.
Exchange rate from MLC to CUP according to elTOQUE: 240 CUP.
What is known about the future "floating exchange rate" that could alter the evolution of the informal currency market in Cuba?
The implementation of a floating exchange rate in Cuba, announced by Prime Minister Manuel Marrero in December 2024, aims primarily to compete with the informal currency market. However, this project faces skepticism from experts and numerous structural challenges.
It is expected that the official floating rate will aim to align more closely with that of the informal market (which is currently more competitive), which could encourage economic actors to operate within the formal market.
However, the economist Pavel Vidal pointed out recently that, without deep economic reforms or macroeconomic stabilization measures, it will be difficult to displace the informal market, which has become sophisticated and digitized.
The cited source estimates that it is likely that the formal and informal markets will coexist for a long time, as the former faces challenges in terms of credibility, infrastructure, and currency flow.
The same source asserts that among the challenges of the promised "floating exchange rate" is the lack of infrastructure; specifically, the insufficient technological and logistical capacity in banks and exchange houses could perpetuate the preference for the informal market.
Another challenge is the inflationary pressures, meaning the lack of clear policies to control inflation and improve the economy, which could undermine confidence in the formal system.
In conclusion, some experts believe that the introduction of a floating exchange rate could represent a step forward in Cuban economic policy, but its success will depend on economic and fiscal restructuring, the transparency and autonomy of the Central Bank, and the integration of the floating rate into a unified strategy for the monetary system.
Without these conditions, it is unlikely that the informal market will disappear in the short term, remaining a crucial player in the Cuban currency landscape.
Meanwhile, the daily "dance" of the informal currency market in Cuba continues.
Equivalences of each available euro and US dollar bill to Cuban pesos (CUP)
United States Dollar (USD) to Cuban Peso (CUP), according to the exchange rates on 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.
Euro (EUR):
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.
Frequently Asked Questions about the Exchange Rate and the Informal Currency Market in Cuba
What is the current value of currencies in the Cuban informal market?
In the informal Cuban market, the dollar is valued at 340 CUP, the euro at 341 CUP, and the freely convertible currency (MLC) at 240 CUP. These values reflect the volatility that characterizes the island's currency exchange market.
What is the floating exchange rate announced by the Cuban government?
The floating exchange rate is a mechanism that would allow for the adjustment of the official exchange rate according to market supply and demand. This system aims to compete with the informal market and recover remittance income, although it faces skepticism due to the lack of deep economic reforms.
Why does the informal market remain relevant in Cuba?
The informal foreign exchange market remains relevant because it meets the demand for currency that the government cannot cover, establishing real prices for goods and services. The lack of effective measures to stabilize the exchange market leaves the informal market as the main price regulator on the island.
What challenges does the implementation of a floating exchange rate face in Cuba?
The implementation of a floating exchange rate faces challenges such as the lack of technological and logistical infrastructure in banks and exchange houses, and the need for deep economic reforms to compete with the informal market. Without these conditions, the informal market is likely to coexist with the formal one for an extended period.
Filed under:
