Currency Dips Slightly in Cuba's Informal Market

On Wednesday, the euro experienced a modest drop in Cuba's informal market, declining by five pesos to settle at 760 Cuban pesos (CUP), according to data from elTOQUE concerning Cuba's exchange rates. This marks the first indication of relief after days of a consistent increase in currency prices.

Meanwhile, the US dollar remains unchanged at 680 CUP, and the Freely Convertible Currency (MLC) holds steady at 490 CUP, showing no change from the previous day.

Dollar's Persistent Rise

The dollar's stability on Wednesday should not overshadow the significant rise seen over the past few days. The American currency has surged for eight consecutive days since the end of June, when it was valued at 605 CUP.

In just the first week of July, the dollar jumped by 75 pesos, equating to a 12.4% depreciation of the Cuban peso during that time. The increase was steady: from 610 CUP on July 1st to 620 on the 2nd, 645 on the 4th, 660 on the 5th, 670 on the 6th, and finally reaching 680 on the 7th, where it has stabilized.

In contrast, the official rate from the Central Bank of Cuba places the dollar at 585 CUP and the euro at 669.53 CUP, figures that are far removed from the informal market reality.

Impact of Economic Measures

The current volatility can be traced back to a specific event. On June 19, 2026, the National Assembly approved a set of 176 economic measures proposed by Prime Minister Manuel Marrero Cruz. This includes, for the first time since 1959, the authorization of private banking, private exchange houses, and a digital exchange market.

The informal market's response was swift and disproportionate: the dollar soared to a historic high of 695 CUP on June 21st, and the euro reached 800 CUP on the same day. After a correction by June 30th, with the dollar retreating to 605 CUP, the upward trend resumed strongly from July 1st.

Economist Pedro Monreal González expressed skepticism about these announced reforms. On June 26th, he labeled the measures as a "monstrosity" or "deformed hybrid," warning that "the numbers don't add up."

Market Overreaction and Herd Behavior

ElTOQUE has documented the phenomenon explaining these extreme movements. They describe it as "overshooting" or an exchange rate overreaction: "In response to a change in expectations, whether from an economic policy announcement, a rumor, or a crisis of confidence, the foreign currency price spikes beyond what the real economic fundamentals justify."

This is compounded by what's known as the "herd effect": "People buy currency not because they've rationally assessed the situation, but because they see others buying, and the fear of being left behind fuels the rise."

Once the market processes the information, it corrects, but this correction never returns prices to their starting point: "The new floor is higher than the previous one," warns elTOQUE.

Pavel Vidal, from the Observatory of Currencies and Finances, highlights the market's structural irrationality: "Cuban exchange markets sometimes move wildly based on waves of optimism or pessimism."

The Plummeting Peso

The slight dip in the euro on Wednesday doesn't alter the overall backdrop. The Cuban peso has lost over 95% of its value against the dollar in just six years: from 42 CUP in 2020 to the current 680 CUP.

Between January and April 2026, the average annual depreciation of the peso was 45%, more than double the rate for all of 2025, when it stood at 22%.

ElTOQUE sums up the situation with a warning well-known to Cubans: "As long as these conditions persist—real currency shortages, three-digit inflation, fiscal deficits, and lack of confidence in the Cuban peso—the rate inevitably rises again."