The informal currency market in Cuba has once again become a scene 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 that brought them down to 605 CUP and 700 CUP, respectively, by the end 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 fundamental insights and points to a phenomenon known in economic theory: overshooting or currency overreaction.
Overshooting: When the market exaggerates
According to the analysis by elTOQUE, “in response to a shift in expectations, whether it be an announcement of economic policy, a rumor, or a crisis of confidence, the price of foreign currency soars beyond what the actual fundamentals of the economy would justify.”
This excess explains why the dollar and the euro rose so quickly to record levels in June.
But that increase is not sustainable.
When the market absorbs the real situation, the adjustment comes.
“When the market fully absorbs the true magnitude of that change, it corrects. But the correction is never complete. The new floor remains higher than the previous one,” warns the independent media, which reminds us 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, although the dollar has dropped from 695 CUP, it remains 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 being left behind.
People buy foreign currency not because they have rationally assessed the context, but because they see others buying, the study points out.
When that collective impulse wanes, what experts refer to as a "reality check" occurs: a correction that is not a response to economic improvements, but rather that the market had overbought.
The rebound on July 1st confirms the volatility
Although the drop at the end of June could be interpreted as a temporary relief, the latest 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 noted that the Cuban currency markets move “sometimes in an exuberant manner based on certain waves of optimism or pessimism,” making any stable prediction difficult.
The underlying problems remain unchanged
Beyond 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 situation depends on the real scarcity of foreign currencies, triple-digit inflation, fiscal deficit, and structural distrust in the Cuban peso. As long as these conditions do not change, the rate will inevitably rise again.”
In this context, the recent decline of the dollar and the euro does not represent a real improvement, but rather a phase within a cycle of overbuying and correction.
The slight rebound on July 1 reinforces this interpretation: the Cuban informal market remains untethered, and the peso continues to lose value against foreign currencies.
In short, what has happened in recent days is not an exception, but rather a confirmation of a recurring pattern.
And as long as the economic foundations of the country don't change, everything points to the fact that after each decline, new increases will follow.
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