Sunday marked a significant milestone in Cuba's informal currency market as the euro reached a record-breaking 404 Cuban pesos (CUP), marking its highest point in over a year. This surge broke a threshold not surpassed since May 2024, underscoring a continuous upward trend observed in recent days. Remarkably, the euro climbed by four pesos in just 24 hours, moving from 400 CUP on Saturday to 404 CUP by Sunday.
Sunday, June 8, 2025 - 1:00 PM
Exchange Rates: Dollar (USD) to Cuban pesos (CUP): 375 CUP Euro (EUR) to Cuban pesos (CUP): 404 CUP Freely Convertible Currency (MLC) to Cuban pesos (CUP): 260 CUP
Meanwhile, the U.S. dollar is also on the rise, now valued at 375 CUP, while the MLC remains unchanged at 260 CUP. This increase highlights the perception of ongoing currency instability in the Cuban economy, where the informal market serves as the primary indicator of monetary value due to the lack of a reliable official exchange rate and a functional state-run currency market.
The Impact on Cuban Households
The euro's valuation at 404 CUP has immediate implications for the domestic economy. This figure not only holds symbolic weight but also signifies the continued erosion of the Cuban peso's purchasing power, especially as state salaries remain tied to the weakening currency. The effects are palpable in sectors such as food, medicine, transportation, and essential services, many of which require payment in dollars or MLC.
This new high for the euro rekindles memories of May 2024, when similar figures were reported, driven by scarce foreign currency in official channels and rising inflation. Today, with an even more fragile economy and no signs of effective recovery, returning to these levels generates significant anxiety among a population already struggling to meet basic needs.
A Volatile and Speculative Market
Recently, the Cuban Observatory of Currencies and Finances (OMFi) warned that the informal currency market is "highly volatile and sensitive to speculative and political factors." The absence of a transparent exchange market and mistrust in official economic policies have fueled informal operations, where supply and demand are dictated by speculative and social logic.
The introduction of new ETECSA rates, often referred to as "the tariff hike," has spurred additional demand for foreign currency, particularly to pay for internet and communication services. This situation puts further pressure on the black market, where many Cubans seek dollars and euros to stay connected with relatives abroad or manage everyday expenses.
Future Outlook
If measures are not implemented to bolster confidence in the national currency, the euro's spike and the dollar's steady climb could persist, potentially leading to a complete "dollarization" of the economy. An integral reform establishing an official exchange rate and providing fair wages and pensions is essential. In the meantime, Cubans continue to grapple with one of the crisis's harshest consequences: a currency that loses value daily and foreign currency that becomes increasingly unattainable.
Understanding Cuba's Currency Challenges
Why has the euro reached 404 CUP in Cuba's informal market?
The euro's rise to 404 CUP in Cuba's informal market is due to a combination of factors, including increased demand for foreign currency, speculative trading, and a lack of trust in the official exchange rate system.
What impact does the euro's increase have on the Cuban economy?
The euro's increase affects the Cuban economy by reducing the purchasing power of the Cuban peso, leading to higher costs for imported goods and services, and exacerbating economic challenges for ordinary Cubans.
How does the informal market influence Cuba's currency exchange?
The informal market plays a significant role in Cuba's currency exchange by setting unofficial rates that reflect real supply and demand conditions, which can be more reliable than official rates in the absence of a transparent state-run market.