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The informal currency market in Cuba has once again become a stage of extreme volatility in recent days.
After hitting historic highs on June 21, 2026—when the US dollar reached 695 CUP and the euro 800 CUP—both currencies began a sustained decline, which brought them down to 605 CUP and 700 CUP, respectively, by the close of June 30.
However, on July 1st, the dollar has risen again to 610 CUP, confirming that instability continues to dictate the pace of the market.
An exhaustive analysis published this Tuesday by the independent media elTOQUE provides essential insights and points to a phenomenon known in economic theory: overshooting or currency overshoot.
Overshooting: When the market overreacts
According to the analysis by elTOQUE, “in the face of a change in expectations, whether it be an announcement of economic policy, a rumor, or a crisis of confidence, the price of foreign currency skyrockets beyond what the real fundamentals of the economy justify.”
This excess explains why the dollar and the euro surged so quickly to record levels in June.
But that increase is not sustainable.
When the market assimilates the real situation, the adjustment arrives.
“When the market finishes grasping the true magnitude of that change, it corrects. However, the correction is never complete. The new floor remains higher than the previous one,” warns the independent media, which notes that this pattern is not new in Cuba.
Since 2022, elTOQUE has documented similar cycles: sharp increases, peaks, partial declines, and stabilization at levels higher than the initial ones.
Thus, even though the dollar has dropped from 695 CUP, it is still far from the 435 CUP it was trading at in early 2026.
The "herd effect" and the "reality check"
The analysis also highlights the role of psychological factors in the Cuban informal market.
The so-called "herd effect" drives many people to buy foreign currency out of fear of falling behind.
People buy foreign currency not because they have rationally assessed the context, but because they see that others are buying, the study points out.
When that collective impulse wanes, what experts refer to as a "reality check" occurs: a correction that does not stem from economic improvements, but rather from the market having overbought.
The rebound on July 1 confirms the volatility
Although the drop at the end of June could be interpreted as a temporary relief, the most recent data confirms that the underlying trend has not changed.
On July 1st, the dollar reversed its decline and rose to 610 CUP, while the euro remained at 700 CUP and the MLC climbed to 500 CUP.
This rebound validates the warnings of economists like Pavel Vidal, who has pointed out that the Cuban exchange markets move “sometimes exuberantly based on certain waves of optimism or pessimism,” which makes any stable forecasting difficult.
The underlying problems remain unchanged
Beyond the daily fluctuations, elTOQUE emphasizes that the structural causes of the crisis remain unchanged.
Neither the package of 176 economic measures approved by the regime nor the official announcements have managed to change the economic reality of the country.
The diagnosis is clear: “This direction depends on the actual scarcity of foreign currency, triple-digit inflation, fiscal deficit, and structural distrust in the Cuban peso. As long as these conditions do not change, the rate will eventually rise again.”
In this context, the recent decline of the dollar and the euro does not signify a real improvement but rather a phase within a cycle of overbuying and correction.
The slight uptick on July 1st reinforces this observation: the Cuban informal market remains unanchored, and the peso continues to lose value against foreign currencies.
Ultimately, what has happened in the last few days is not an exception, but rather a confirmation of a recurring pattern.
And as long as the country's economic foundations do not change, everything suggests that after each decline, there will be new increases.
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