This past Saturday, the value of the U.S. dollar (USD) and the euro (EUR) reached unprecedented heights in Cuba's informal market, underscoring the significant gap between the actual economy and the official narrative.
According to data from the independent observatory elTOQUE, the dollar is valued at 458 Cuban pesos (CUP), while the euro trades at 500 CUP. Meanwhile, the Freely Convertible Currency (MLC) remains steady at 400 CUP.
In stark contrast, the Central Bank of Cuba (BCC) set its official rates at 413 CUP per dollar and 480.36 CUP per euro, creating a discrepancy of 45 pesos for the dollar and nearly 20 for the euro when compared to the informal market.
The Dual Economy Dilemma
The difference between these rates goes beyond mere price variations; it highlights the existence of two incompatible economies in Cuba. The official economy is artificially maintained by administrative decisions with no real currency supply, while the informal economy aligns with market logic, scarcity, and fear.
Despite the government's assertion that the "daily floating rate" reflects genuine market conditions, the truth is far from it. The BCC adjusts its rates in symbolic increments—barely one or two pesos a day—while street currency rates skyrocket. This inertia renders the official rate a meaningless figure, lacking any real economic impact or public trust.
Economic and Structural Challenges
Economists consulted by CiberCuba agree that the issue extends beyond monetary concerns to structural ones. "The Central Bank lacks the means to sustain its exchange rate due to the absence of currency reserves and the inability to control real market flows. Informal prices are the true benchmark, not because they are illegal, but because they genuinely reflect reality," an analyst in Havana explained.
The continuous rise of the dollar and the euro also stems from the psychological impact of political circumstances, such as the capture of Nicolás Maduro in Venezuela and fears of a collapse in energy agreements with Cuba. Each geopolitical shake-up sends the Cuban peso into a panic, pushing people to seek refuge in stronger currencies.
Loss of Trust in the Cuban Peso
The widening gap between the official and informal rates not only measures the dollar's value but also indicates the level of distrust in Cuba's economic system. With the euro at 500 CUP and the dollar closing in, the national peso loses not only purchasing power but also credibility as a currency.
In a country where the parallel market dictates actual prices, the Central Bank's "floating rate" continues to float—but over a void.
Understanding Cuba's Currency Crisis
Why is there a significant gap between official and informal exchange rates in Cuba?
The gap results from two conflicting economies: the official economy, maintained by administrative decisions without real currency backing, and the informal economy, which reflects actual market conditions and scarcity.
What factors contribute to the rising value of the dollar and euro in Cuba's informal market?
The increase is driven by political instability, such as events in Venezuela, and the lack of trust in the Cuban peso, prompting people to invest in more stable foreign currencies.
How does the Central Bank of Cuba's policy impact the economy?
The Central Bank's minimal adjustments to its rates render the official exchange rate ineffective, as it does not influence the economy or regain public trust, further widening the gap with the informal market.