The dollar continues to soar in the informal Cuban market, bringing with it the uncertainty for millions of people witnessing the collapse of their national currency's value.
This Wednesday, the independent media elTOQUE published an analysis based on the latest report from the Observatory of Currencies and Finances of Cuba (OMFi), corresponding to October 2025, which helps to understand the underlying causes of this new wave of demand for foreign currency.
“The crisis shows no signs of bottoming out, and there are no apparent solutions in the short or medium term,” has anticipated the economist and principal researcher at OMFi, Pável Vidal.
The refuge in foreign currency as a response to the crisis
In an environment characterized by recession, persistent inflation, and the ongoing devaluation of the Cuban peso, an increasing number of economic agents -small and medium-sized enterprises, informal importers, merchants, or simply consumers- turn to the dollar, the euro, or any strong currency, whether to protect their purchasing power or to carry out basic business transactions.
Exchange Rate Evolution
This dynamic has triggered a significant increase in the demand for foreign currency, driven both by real needs and speculative expectations.
Dollarization of consumption and collapse of the MLC
One of the main drivers of this increasing demand is the dollarization of consumption.
Cuban households, in many cases, can no longer purchase basic products with Cuban pesos and are forced to do so with dollars or with freely convertible currency (MLC).
However, the MLC -an instrument created by the Government to facilitate foreign currency transactions- has lost much of its functionality.
The difference between its official parity (1 MLC = 1 USD) and its actual exchange rate in the informal market (over 2 MLC per dollar) is a clear sign of distrust.
“Part of the collapse of the MLC is associated with the significant reduction of accessible markets with that currency, the irregular supply to the stores, and the loss of real backing in foreign currency”, indicates elTOQUE.
The direct consequence is the intensification of pressure on the informal currency market, and a greater inequality between those who have access to hard currency income and those who rely solely on the Cuban peso.
The productive contraction and competition for foreign currency
The energy crisis, the lack of supplies, and the absence of financing have critically reduced the country's productive capacity.
The small and medium-sized enterprises (SMEs), which have become the main driver of the non-state sector, are forced to import nearly everything, from raw materials to finished products.
This increases the demand for foreign currency and intensifies the competition among companies, consumers, and informal actors for an ever-limited volume of dollars and euros.
This is compounded by the capital flight.
In a context of widespread distrust, both citizens and economic actors seek to shelter their savings in strong currencies or cryptocurrencies, and even transfer them abroad.
"The lack of credibility in the Government's ability to implement effective stabilization policies has encouraged a defensive behavior among the population and the private sector," states the source mentioned.
Excess of currency in circulation and speculation
The excessive issuance of Cuban pesos without real backing in foreign currency or production has created a monetary mass that circulates with increasing speed, seeking to convert into dollars as quickly as possible before it continues to lose value.
“The speed at which weights move reinforces the speculative dynamics of the informal market: money that quickly loses value becomes currency as soon as possible”, warns elTOQUE.
The failure of the banking process has left cash circulation intact, which also contributes to the volatility of the informal market.
Tourism in free fall: Fewer fresh dollars
A further blow adds to this: the decline of tourism. What for years was a steady source of fresh foreign currency for the country is now in crisis.
"The combination of reduced dollar inflow and increased domestic demand inevitably leads to an acceleration in the depreciation of the peso," the cited source indicates.
The tourism industry is suffering from the effects of poor management, deteriorated services, power outages, and a lack of reforms. Fewer visitors mean less foreign currency income, which reduces the available supply for the informal market.
A volatile, manipulated, and uncontrolled market
The OMFi warns that the exchange rate is no longer influenced solely by macroeconomic factors such as inflation or growth, but also by expectations, rumors, and attempts at manipulation.
In September, irregular offers were detected that sought to artificially alter the value of currencies in the informal market, which increases the perception of instability.
"The Cuban currency market no longer responds solely to fundamental factors [...] but also to expectations and speculative dynamics."
Gloomy projections: The dollar could exceed 500 CUP
In this scenario of increasing pressure, the OMFi projects that the dollar could reach 473 CUP, and in an extreme scenario, exceed the symbolic barrier of 500 CUP.
The euro could reach up to 551 CUP, while the MLC would stabilize around 215 CUP.
Beyond the numbers, the real issue is what they reflect.
The sustained increase in demand for foreign currency in Cuba is a direct result of a crisis-ridden economic system: a weakened national currency, collapsed domestic production, a dwindling supply of foreign currency, and a population that no longer trusts its own monetary institutions.
“Each point that the dollar rises reflects not only the depreciation of the peso but also the ongoing impoverishment of Cuban households and the widening gap between the official economy and the real economy,” concludes elTOQUE.
What is at stake is not just the exchange rate, but the stability of a country caught in a spiral of distrust and precariousness.
Frequently asked questions about the dollar crisis in Cuba
Why is the price of the dollar rising in the informal market in Cuba?
The price of the dollar is rising due to the high demand for foreign currencies as a refuge amid the economic crisis, persistent inflation, and the depreciation of the Cuban peso. The population and economic agents are turning to the dollar and other strong currencies to protect their purchasing power and carry out basic transactions in an environment of uncertainty and distrust towards the national currency.
What role does the freely convertible currency (MLC) play in the Cuban economic crisis?
The MLC has lost functionality and trust in the informal Cuban market, contributing to the increased demand for dollars and euros. Although it was created by the government to facilitate transactions in foreign currency, its value has fallen significantly due to the collapse of markets accessible with MLC and the lack of real backing in foreign currency, increasing pressure on the informal foreign exchange market.
What are the projections for the dollar and other currencies in Cuba?
The Observatory of Currencies and Finances of Cuba (OMFi) projects that the dollar could exceed 500 CUP, while the euro could reach 551 CUP. These projections reflect the increasing pressure on the foreign exchange market in a critical economic environment, where the population seeks refuge in strong currencies due to the depreciation of the Cuban peso and the lack of trust in the country's monetary institutions.
How does the decline in tourism in Cuba affect the foreign exchange market?
The decline in tourism in Cuba has significantly reduced the influx of fresh dollars into the country, worsening the shortage of foreign currency in the informal market. This sector, which used to be a constant source of income in foreign exchange, is in crisis due to poor management, deteriorating services, and blackouts, further decreasing the supply of foreign currency and accelerating the depreciation of the Cuban peso.
Filed under:
