The dollar continues to soar in Cuba's informal market, leaving millions anxious as the value of their national currency plummets. On Wednesday, independent outlet elTOQUE released an analysis based on the latest report from the Observatory of Currencies and Finances of Cuba (OMFi), dated October 2025. This analysis sheds light on the underlying reasons behind this new wave of currency demand.
"The crisis shows no signs of bottoming out, and there are no foreseeable solutions in the short or medium term," warns Pável Vidal, the lead economist and researcher at OMFi.
The Dollar as a Safe Haven in Crisis
In a climate characterized by recession, persistent inflation, and the ongoing devaluation of the Cuban peso, an increasing number of economic players—small businesses, informal importers, traders, and ordinary consumers—are turning to the dollar, the euro, or any strong currency. They do so either to safeguard their purchasing power or to conduct basic commercial transactions.
This trend has led to a marked increase in currency demand, driven by both genuine needs and speculative expectations.
Consumer Dollarization and the Collapse of MLC
A key driver of this growing demand is the dollarization of consumption. Cuban households often cannot purchase basic goods with pesos and are compelled to use dollars or Freely Convertible Currency (MLC). However, the MLC—a tool created by the government to facilitate currency transactions—has largely lost its effectiveness.
The gap between its official parity (1 MLC = 1 USD) and its real informal market value (over 2 MLC per dollar) highlights a significant distrust.
"Part of the MLC collapse is linked to the significant reduction in accessible markets with that currency, irregular store supplies, and the loss of real currency backing," states elTOQUE.
The direct consequence is increased pressure on the informal currency market and a widening gap between those with access to hard currency income and those reliant solely on the Cuban peso.
Productive Contraction and Currency Competition
The energy crisis, lack of inputs, and financing absence have critically curtailed the country's productive capacity. Small and medium-sized enterprises (SMEs), now the main engine of the non-state sector, are forced to import nearly everything, from raw materials to finished products. This multiplies their currency demand and intensifies competition among companies, consumers, and informal actors for an ever-diminishing supply of dollars and euros.
Adding to this is capital flight. In a climate of widespread distrust, both citizens and economic players seek to safeguard their savings in strong currencies or cryptocurrencies, even transferring them abroad.
"The lack of credibility in the government's ability to implement effective stabilization policies has spurred defensive behavior among the public and private sectors," notes the source.
An Overabundance of Pesos and Speculation
The excessive issuance of Cuban pesos without real backing in foreign currency or production has created a rapidly circulating money supply, eager to convert into dollars as quickly as possible before further devaluation.
"The speed at which pesos move reinforces the speculative dynamics of the informal market: money that rapidly loses value is converted into currency as soon as possible," warns elTOQUE.
The failure of the banking process has left cash circulation unchanged, also contributing to the volatility of the informal market.
Plummeting Tourism: Fewer Fresh Dollars
Another blow comes from a decline in tourism—once a constant source of fresh currency for the country, now in crisis.
"The combination of decreased dollar inflow and increased domestic demand inevitably accelerates the depreciation of the peso," indicates the cited outlet.
The tourist industry suffers from poor management, deteriorating services, blackouts, and lack of reforms. Fewer visitors mean fewer incoming foreign currencies, reducing the supply available for the informal market.
A Volatile, Manipulated, and Uncontrolled Market
The OMFi warns that exchange rates are influenced not only by macroeconomic factors like inflation or growth but also by expectations, rumors, and manipulation attempts.
In September, irregular offers were detected seeking to artificially alter the value of currencies in the informal market, increasing the perception of instability.
"The Cuban exchange market no longer responds solely to fundamental factors [...] but also to expectations and speculative dynamics," the report notes.
Bleak Forecasts: The Dollar Could Exceed 500 CUP
In this context of mounting pressure, OMFi projects that the dollar could reach 473 CUP and, in an extreme scenario, surpass the symbolic 500 CUP mark. The euro could hit up to 551 CUP, while the MLC might stabilize around 215 CUP.
Beyond the numbers, the real issue is what they reflect. The sustained increase in currency demand in Cuba is a direct result of an economic system in crisis: a weakened national currency, a collapsed national production, a declining currency supply, and a population that no longer trusts its own monetary institutions.
"Every point the dollar climbs not only expresses the depreciation of the peso but also the continued impoverishment of Cuban households and the growing gap between the official and real economy," concludes elTOQUE.
The stakes are not just about the exchange rate but the stability of a nation caught in a spiral of distrust and precariousness.
Understanding the Cuban Dollar Crisis
Why is the dollar increasing in value in Cuba?
The dollar is rising in value due to the Cuban economic crisis, marked by inflation, devaluation of the peso, and a lack of trust in government policies. This has led to increased demand for stable foreign currencies.
What role does consumer dollarization play in the crisis?
Consumer dollarization forces households to use dollars or Freely Convertible Currency (MLC) to purchase basic goods, increasing demand for foreign currency and contributing to the peso's depreciation.
How does the tourism decline affect Cuba's economy?
The decline in tourism reduces the inflow of fresh foreign currency, which was a significant source of national revenue, thus diminishing the available currency supply for the informal market.
What are the projections for the Cuban peso?
The Observatory of Currencies and Finances of Cuba projects that the dollar could reach 473 CUP and potentially surpass 500 CUP, while the euro may hit 551 CUP.