Cuba's informal currency market wrapped up Thursday, November 12, with divergent trends: the U.S. dollar experienced a slight decline, while the euro showed modest gains.
As of 8:00 PM Cuban local time, the Cuban peso showed some recovery against the American currency, although this offers little relief for those who rely on foreign currencies for everyday expenses.
The U.S. dollar concluded the day at an average of 905 Cuban pesos (CUP), with buying at 900 CUP and selling at 910 CUP. This marks a drop of 3 pesos from the previous day, when it was valued at 908 CUP.
Weekly and Monthly Dollar Trends
The dollar has been on a downward trend this week, having been priced at 928 pesos seven days ago, resulting in a decrease of 23 pesos. Over the past month, the current rate is above the 793 pesos recorded 30 days ago, though this should be interpreted cautiously due to potential index methodology adjustments.
In the past month, the dollar has fluctuated between a high of 940 and a low of 793 pesos in the informal market. It remains a significant indicator of market dynamics amid a chronic shortage of foreign exchange.
Euro's Performance on the Rise
The euro ended the day higher, with an average value of 989 CUP—buying at 977 CUP and selling at 1,000 CUP. Compared to the previous day, when it was 985 pesos, the euro increased by 4 pesos. However, it has fallen in weekly comparisons, as it was at 1,000 pesos a week ago, representing a decline of 11 pesos.
Over the last 30 days, the euro has reached a high of 1,010 pesos and a low of 888 pesos, maintaining its status as the most expensive currency in Cuba's parallel market, surpassing the dollar by 84 pesos at the day's close.
MLC and Its Limited Circulation
The MLC closed around 572 CUP in average value, with buying at 601 CUP and selling at 543 CUP. This value is merely indicative, as there are few data points for this currency, limiting its representativeness. It fell by 56 pesos from the previous session, an 8.8% drop.
In the past week, it has dropped from 653 pesos, and its monthly range has varied between a high of 795 and a low of 528 pesos. Without physical existence, its use is restricted to state-run stores that accept it, limiting its circulation compared to cash currencies.
Exchange Rate Discrepancies
The official exchange rate from the Central Bank of Cuba (Segment III), set at 820 CUP per dollar and 910 CUP per euro on November 12, remains significantly lower than the rates in the informal currency market. The gap between the official and informal rates is 85 pesos for the dollar and 79 pesos for the euro.
Even though Segment III was introduced as a more flexible exchange mechanism, its official rate remains far from the informal market rate and fails to meet the population's real currency demands. Notably, the official dollar rate has climbed from 702 to 820 CUP over the last month, reflecting ongoing pressure on the Cuban peso without closing the gap with the parallel market.
In a scenario of persistent inflation, low state salaries, and increasing partial dollarization, each variation in the informal market directly impacts internal prices and the purchasing power of Cubans. The dollar's decline today offers minimal and temporary relief, which, in the context of the island's structural crisis, is unlikely to translate into real improvements for most people.
The Role of CiberCuba's Exchange Index
The CiberCuba Exchange Rate is an index of Cuba's informal market, developed through automated analysis of thousands of foreign exchange buying and selling posts on Telegram and Facebook groups. It excludes atypical offers and spam messages, weighs each transaction by its age, and consolidates a representative value updated several times a day.
Understanding Cuba's Informal Currency Market
Why is the informal currency market in Cuba significant?
The informal currency market in Cuba is significant because it reflects the real demand and supply of foreign exchange, offering a more accurate representation of currency value than the official rates set by the government.
What factors contribute to the fluctuation of the dollar and euro in Cuba's market?
Fluctuations in the dollar and euro rates in Cuba's market are influenced by factors such as demand for foreign currency, government policies, international economic conditions, and the overall economic situation in Cuba, including inflation and salary levels.
How does the gap between official and informal exchange rates affect Cubans?
The gap between official and informal exchange rates affects Cubans by reducing their purchasing power, as the higher informal rates often dictate the real cost of goods and services in the market, impacting their daily livelihoods.