The U.S. dollar has continued its upward trend in Cuba's informal market, hitting 370 Cuban pesos (CUP) this Saturday, according to the independent daily monitoring by elTOQUE. This increase of one Cuban peso from the previous day marks a five-peso rise in just a week, underlining a persistent streak that highlights the mounting pressure on the national currency.
Saturday, May 3, 2025 - 05:00
Exchange Rate of U.S. Dollar (USD) to Cuban Pesos (CUP): 370 CUP
Exchange Rate of Euro (EUR) to Cuban Pesos (CUP): 385 CUP
Exchange Rate of Freely Convertible Currency (MLC) to Cuban Pesos (CUP): 265 CUP
The week kicked off with the dollar at 365 CUP, maintaining a relatively steady value until Wednesday. However, from that point, the greenback began a gradual ascent, reaching a new record figure this Saturday.
Impact of Early May on Exchange Rates
This surge coincides with the beginning of May, a period typically marked by increased activity in informal transactions due to remittance inflows and the population's supply needs. The euro has also experienced a slight increase in recent days, standing at 385 CUP this Saturday, while the MLC remains stable at 265 CUP, indicating less volatility compared to foreign currencies.
Persistent Market Distortions
This behavior underscores the ongoing distortions in Cuba's exchange market, where the demand for foreign currency overwhelmingly surpasses supply. Despite official efforts to curb inflation and stabilize the economy, Cubans continue to turn to the informal market as the only means to obtain hard currency, crucial for acquiring basic goods and dollarized services.
The ongoing devaluation of the Cuban peso highlights the lack of confidence in the regime's economic policies, revealing the failure of the official exchange market, which remains disconnected from the daily reality of millions of citizens. With this latest increase, the dollar's price is expected to continue indicating the economic deterioration on the island.
Stagflation in Cuba? Rising Dollar as a Symptom of a Trapped Economy
The recent dollar surge is not an isolated incident but rather a direct reflection of a national economy in structural crisis. Several economists warn that Cuba is undergoing a process of stagflation, a lethal combination of persistent inflation, stagnant economic growth, and worsening employment conditions.
The sustained rise in the informal exchange rate is partly due to the loss of value of the Cuban peso, which has seen its purchasing power collapse. This fuels an inflationary spiral, as most basic goods are priced in foreign currencies.
Simultaneously, the country faces a deep productive paralysis: key sectors such as agriculture, industry, and tourism services are operating at minimal levels. The shortage of supplies, low investment, and internal market distortions hinder any solid economic recovery.
In this context, visible and invisible unemployment—including underemployment and forced migration—further worsen the outlook. The exponential increase in informal work and mass emigration reduce the active labor base and undermine recovery prospects.
This combination of factors confirms that the Cuban economy is trapped in a cycle of stagflation, where traditional economic policy tools—such as controlled devaluation or subsidies—prove ineffective. The dollar's rise is not just a number: it's the thermometer of an economy that can't find a way out.
Understanding Cuba's Economic Dilemma
Why is the U.S. dollar rising in Cuba's informal market?
The dollar's rise is primarily due to the increasing pressure on the Cuban peso, driven by high demand for foreign currency and lack of confidence in the national economy.
What does stagflation mean for Cuba's economy?
Stagflation in Cuba implies a combination of persistent inflation, economic stagnation, and deteriorating employment conditions, making recovery challenging.
How does the informal market affect Cuban citizens?
The informal market provides a crucial avenue for Cubans to access hard currency, necessary for purchasing basic goods and services, despite official efforts to stabilize the economy.