The U.S. dollar is experiencing a dramatic surge in Cuba's informal market, significantly outpacing other currencies. As of early Thursday, the dollar jumped five points, reaching 465 CUP. Meanwhile, the Freely Convertible Currency (MLC) took a dip, falling five pesos to an average of 200 CUP, according to data from the independent outlet elTOQUE for October 16. In contrast, the euro remains stable at 520 CUP, a rate it has held for several days.
Exchange Rates on October 16, 2025 - 6:36 a.m. in Cuba:
USD to CUP according to elTOQUE: 465 CUP
EUR to CUP according to elTOQUE: 520 CUP
MLC to CUP according to elTOQUE: 200 CUP
Drivers Behind the Dollar's Surge in Cuba's Informal Market
The October report from Cuba's Monetary and Financial Observatory (OMFi) highlights that the peso's depreciation stems from a multifaceted crisis. This situation has led Cubans—from households to small and medium enterprises—to seek refuge in stable currencies as a defense against inflation, for business operations, or simply to survive. The lack of confidence in the national currency and a pervasive belief that the crisis has no short-term solution are bolstering this defensive behavior.
One key factor in the dollar's rise is the increasing dollarization of domestic consumption. More Cubans need dollars or MLC to purchase essential goods and services, as the peso's practical utility declines. However, the MLC itself is facing a crisis due to product shortages in MLC stores, loss of real currency backing, and fewer outlets accepting it. This deterioration has led to the term "phantom dollars" being used to describe MLC cards, amid growing speculation about their potential elimination.
Impact of Economic Pressures on Currency Dynamics
The decline in domestic production, exacerbated by energy shortages and lack of inputs, has forced small and medium enterprises to seek resources abroad, thus increasing their need for foreign currency. This has intensified competition in the informal market among businesses, consumers, and traders. Additionally, capital flight is on the rise, with people turning to cryptocurrencies or offshore accounts to secure their earnings. This trend is driven by widespread distrust in the government's ability to implement stabilizing policies.
The excessive circulation of pesos lacking production backing, combined with the failure of the banking process, has incentivized the immediate conversion of pesos into foreign currencies. This speculative process is accelerating due to the perception that the peso's value is declining daily.
Furthermore, the continuous downturn in tourism has severely impacted the influx of fresh foreign currencies into the country. Reduced dollar flow from tourism exacerbates the imbalance between the supply and demand for foreign currency. Projections from elTOQUE indicate that the dollar could reach 473 CUP, and potentially exceed 500 CUP if current conditions persist. The euro might hit 551 CUP, and the MLC could rise to around 215 CUP.
Currency Exchange Equivalencies
As of October 16, the exchange equivalencies for U.S. dollars to Cuban pesos are:
- 1 USD = 465 CUP
- 5 USD = 2,325 CUP
- 10 USD = 4,650 CUP
- 20 USD = 9,300 CUP
- 50 USD = 23,250 CUP
- 100 USD = 46,500 CUP
For euros to Cuban pesos, the equivalencies are:
- 1 EUR = 520 CUP
- 5 EUR = 2,600 CUP
- 10 EUR = 5,200 CUP
- 20 EUR = 10,400 CUP
- 50 EUR = 26,000 CUP
- 100 EUR = 52,000 CUP
- 200 EUR = 104,000 CUP
- 500 EUR = 260,000 CUP
Since late 2024, the Cuban government announced plans to introduce a floating exchange rate system in 2025 to narrow the gap between official and informal currency values. However, with just over two months left in the year, the regime remains silent on this issue.
Frequently Asked Questions on Cuba's Currency Crisis
Why is the U.S. dollar rising in Cuba's informal market?
The U.S. dollar is rising due to a mix of structural issues and speculative dynamics in Cuba. The lack of confidence in the national currency and the need for stable currencies to counter inflation are primary drivers.
What impact is the tourism decline having on Cuba's economy?
The decline in tourism has significantly reduced the flow of foreign currencies into Cuba, worsening the imbalance between supply and demand for these currencies, and further destabilizing the economy.
How are small and medium enterprises affected by the currency situation?
Small and medium enterprises are increasingly reliant on foreign currencies to import necessary resources due to the decline in local production, intensifying competition in the informal market.