The Central Bank of Cuba (BCC) recently adjusted its official exchange rate for Segment III, marking one of the most significant shifts seen since the introduction of this currency scheme last December. This move is an attempt to narrow the gap with the thriving informal market.
As of February 7, 2026, the exchange rate for the U.S. dollar (USD) was set at 455 Cuban pesos (CUP), a six-peso increase, while the euro (EUR) rose to 537.86 CUP. This change highlights an accelerated devaluation of the peso, yet it underscores a persistent truth: the so-called "floating rate" lags behind the informal market, reacting belatedly to trends already established outside the official system.
Staggered Adjustments, Not True Floating
The official data from the BCC provides a detailed account of the exchange rate's behavior over the past week. From January 30 to February 2, the Segment III rate remained static at 441 CUP per dollar, unchanged for four consecutive days.
The first adjustment occurred on February 3, when the BCC raised the rate to 447 CUP, breaking a period of stagnation. Following two days of stability, the rate increased again on February 5 to 449 CUP, where it stayed until the week's end. This pattern reveals a key feature of the system: there is no daily fluctuation driven by supply and demand, but rather a series of administrative pauses followed by abrupt jumps, implemented when the gap with the informal market becomes too apparent to ignore.
Exchange Rate Fragmentation: A "Floating Rate" That Never Truly Floats
An analysis of the entire history of Segment III confirms that the main issue with the BCC's exchange rate scheme is not merely the rate level, but its internal fragmentation and inconsistent adjustments.
Official records indicate that the "floating rate" hasn't followed a continuous or organic pattern but has instead experienced rigid phases. During initial periods, the dollar rate was frozen for consecutive days, despite upward movements in the informal market.
This administrative inertia was followed by sudden jumps, often by several pesos in one day, applied when the disparity with the street became politically untenable. This pattern of prolonged pauses, abrupt adjustments, and renewed stasis persists throughout the series. The system does not exhibit daily fluctuations based on market signals but rather a reactive mechanism dictated by internal BCC decisions, not real market conditions.
Adding to this dynamic is a deeper level of fragmentation. The official records reveal that while Segment III set a base rate for general operations, higher official rates coexisted at service counters, airports, hotels, and specific cash sale channels.
At several points, these parallel rates exceeded the published "floating" rate by 20 to 30 pesos, creating a multi-tiered pricing system within the state's own apparatus. This results in a conflicting signal for citizens and economic actors: the state implicitly acknowledges that the dollar's value is higher than its official rate but resists unifying it.
Such dispersion legitimizes the informal market rather than reducing it, confirming that even the government does not operate with a single reference price. From the inception of Segment III to today, the gap with the informal market has never closed, only shifted. Each official adjustment has come too late, after the street had already set a new benchmark.
Thus, the "floating rate" neither anchors expectations nor organizes the market; it chases prices that already exist. Economically, the accumulated evidence points to a structural failure. A system with multiple rates, restricted access, and discretionary adjustments cannot inspire trust or stability. The historical data confirms that the problem is not temporary or recent but inherent to the exchange rate scheme's design.
A Delayed Adjustment Amid an Unfavorable Context
The context in which the BCC accelerates its rate is not favorable. The Cuban economy faces persistent inflation, an energy crisis, foreign currency shortages, and an increasingly uncertain political environment.
Amidst this scenario, the informal market reacted gradually yet steadily throughout the week, while the official rate advanced in fits and starts. Independent economists agree that this behavior confirms the practical failure of the exchange rate scheme. Without transparency, real access to foreign currency, and with multiple official prices coexisting, the "floating rate" remains a reactive tool, incapable of organizing the market.
The message from the official data is clear: the BCC adjusts but does not control the process. As long as the informal market continues to set the real value of money, each delayed move of the official rate will only reaffirm the loss of credibility of the Cuban peso and the regime's currency policy.
Understanding Cuba's Exchange Rate Dynamics
What is Segment III in Cuba's exchange rate system?
Segment III refers to the official exchange rate set by the Central Bank of Cuba, which is intended to manage the country's currency valuation. It has been criticized for not reflecting real market conditions and lagging behind the informal market rates.
Why is the "floating rate" not effective in Cuba?
The "floating rate" is ineffective because it does not truly fluctuate based on supply and demand. Instead, it follows a pattern of administrative pauses and abrupt adjustments, failing to keep pace with the informal market.
How does the exchange rate fragmentation affect Cuba's economy?
Exchange rate fragmentation creates a multi-tiered pricing system, which undermines trust and stability. It results in differing official rates and legitimizes the informal market by acknowledging that the official rate does not reflect the true value of the currency.