The informal currency exchange market in Cuba is grappling with the repercussions of the latest sanctions imposed by the United States, while also dealing with the stagnant response from Miguel Díaz-Canel's government, which remains ineffective in addressing the country's economic and monetary challenges.
On Wednesday, the US dollar climbed to 385 Cuban pesos (CUP), whereas the Freely Convertible Currency (MLC) dropped to 250 CUP, hitting a recent low. Meanwhile, the euro held firm at 425 CUP, following weeks of gains that saw it reach a record high in June.
Fluctuations in Cuba's Informal Exchange Rates
Wednesday, July 2, 2025 - 05:08 AM saw the following informal exchange rates:
US Dollar (USD) to Cuban Pesos (CUP): 385 CUP
Euro (EUR) to Cuban Pesos (CUP): 425 CUP
Freely Convertible Currency (MLC) to Cuban Pesos (CUP): 250 CUP
Compared to Tuesday, the USD rose by three pesos, jumping from 382 to 385 CUP, continuing its upward trajectory. The euro remained unchanged, steady at 425 CUP after reaching its peak earlier in the week. In contrast, the MLC fell by five pesos, sliding from 255 to 250 CUP, indicating a persistent downward trend.
Dollar's Rise Following Sanctions
The dollar’s ascent began on June 30, just hours after President Donald Trump signed a presidential memorandum tightening the economic embargo on Cuba. This directive bans American tourism and restricts dealings with entities controlled by the regime, especially those linked to the military conglomerate GAESA.
The White House claims this move aims to "realign" policy towards a stance of maximum pressure, reminiscent of Trump's first term. Consequently, the informal market has responded with growing demand for dollars, both as a safe haven and an informal exchange medium amid potential increased restrictions.
The three-peso rise over the last 24 hours highlights this mounting pressure and signals a break from the relative stability of the USD, which had hovered around 380 CUP for several days.
The Euro's Steady Hold
Although the euro has remained stable in recent days, its current steadiness follows a significant rise. The monthly chart shows a clear upward trend from early June, when the European currency was around 395 CUP.
In just four weeks, it surged to 425 CUP, marking a historic high in the Cuban informal market. Today's stabilization could be seen as a technical pause rather than the start of a correction. The euro's high valuation continues to reinforce its role as a robust alternative to the dollar amid exchange rate uncertainty.
MLC's Decline in Confidence
Conversely, the MLC has been on a steady decline. The five-peso drop since Tuesday brings its rate to 250 CUP, reflecting diminishing confidence in this virtual currency, which is solely used on state-run platforms.
Recent US sanctions, directly affecting GAESA-controlled businesses such as Tiendas Caribe and CIMEX, where MLC is utilized, have led many citizens to reduce their reliance on this currency, viewing it as less practical or riskier.
Impact of US Policy on Cuban Markets
With a fragmented exchange rate system and a promised monetary reform yet to materialize, the informal market remains the primary indicator of Cuba's real economy. Recent movements clearly demonstrate that US political decisions and the Cuban government's inaction continue to have a swift and direct impact on the island's currency behavior.
The lack of transparency and institutional exchange mechanisms continues to push Cubans towards a volatile informal market heavily influenced by external factors.
Understanding Cuba's Currency Fluctuations
Why has the US dollar increased in value in Cuba?
The US dollar has increased in value due to heightened demand in the informal market, spurred by recent US sanctions and economic uncertainties in Cuba.
What impact do US sanctions have on Cuba's currency market?
US sanctions lead to increased demand for the US dollar as a safe asset and restrict transactions with regime-controlled entities, affecting currency stability.
Why is the euro considered a strong alternative to the dollar in Cuba?
The euro is seen as a strong alternative due to its high value and stability, providing a reliable option amid the uncertainty of the dollar's fluctuations.