The Freely Convertible Currency (MLC) continues to plummet in the Cuban informal market, confirming a downward trend that has accelerated over the past month and highlights the failure of the monetary and exchange policies implemented by the government.
According to the record from this Saturday, August 9, 2025, the exchange rate of the MLC has dropped to 210 Cuban pesos (CUP), marking its lowest level in months. The decline is clearly reflected in the monthly evolution graph, which shows a sustained decrease from values close to 240 CUP at the beginning of July, down to the current rate.
In parallel, the US dollar (USD) and the euro (EUR) maintain their exchange rates well above the MLC, standing at 397 CUP and 445 CUP, respectively.
Informal exchange rate in Cuba Saturday, August 9, 2025 - 12:00
Exchange Rate Evolution
- Exchange rate of the dollar (USD) to Cuban pesos CUP: 397 CUP
- Exchange rate of the euro (EUR) to Cuban pesos CUP: 445 CUP
- Exchange rate from (MLC) to Cuban pesos CUP: 210 CUP
The difference between these currencies and the virtual currency used in dollarized state shops reflects the loss of confidence in the MLC by the informal market as a store of value and a medium of exchange.
The rapid depreciation of the MLC adds to the liquidity crisis on the island and the increasing shortages, leaving consumers in an increasingly vulnerable situation.
A collapse that exposes the failure of the official exchange rate policy
The decline of the MLC in the informal market is not an isolated phenomenon; rather, it is the most visible symptom of the accumulated wear and failure of the Cuban regime's foreign exchange policy.
Since the prolonged coexistence of two currencies and unrealistic exchange rates to the current fragmentation of the currency market, the State has attempted to maintain official values disconnected from real supply and demand.
The MLC was created in 2019 as a tool to collect foreign currencies and keep them within the state financial system. Theoretically backed by dollars and euros, and usable only through bank cards in state-run stores, its value relied more on administrative control than on genuine economic strength.
In its early years, the apparent stability of the MLC relied on the planned scarcity of means of payment and exclusive access to certain goods, but never on a solid backing or market transparency.
The current decline is due to interconnected factors:
- Real foreign currency deficit in the banking system: deposits in MLC do not always have physical backing, which fuels the perception that they are "account entries" without tangible value.
- Inorganic expansion of the money supply: the issuance of CUP without real productive growth indirectly devalues any means of payment issued by the State, including the MLC.
- Growing gap between official and informal exchange rates: with the dollar and euro significantly above the MLC, the informal market is adjusting its rate, penalizing it.
- Chronic shortages in MLC stores: if there are no goods to buy, the currency loses practical utility and therefore demand.
- Lack of real convertibility: the inability to exchange MLC for foreign currencies in the official circuit condemns it to being an internal and devalued means of payment.
This scenario fuels a phenomenon that the government itself tried to prevent: the partial dollarization of the economy. Distrust in the CUP and the MLC drives people to seek refuge in physical currencies, particularly dollars and euros, which circulate in private transactions and even in informally tolerated commercial operations.
The result is a fractured monetary system, where the Cuban peso holds a marginal position in actual trade, and the MLC is relegated to a forced use in an increasingly irrelevant state circuit.
The sinking of the MLC, far from being a mere temporary fluctuation, demonstrates that the regime's exchange rate policy has failed to provide stability, confidence, or credibility. Instead of organizing the market, it has ultimately fragmented it, accelerating the abandonment of the national currency as an economic reference.
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