For the first time since reaching the 300 pesos mark last February, the U.S. dollar is now valued at 298 Cuban pesos (CUP) in the informal market, as reported by the independent outlet elToque. This milestone marks the dollar's first dip below the 300 CUP threshold in nearly a year—February 13, 2024—after a series of fluctuations that kept it consistently above that level.
The decline comes amid an economic landscape in Cuba characterized by significant currency fluctuations. While the euro remains steady at 300 CUP, the Freely Convertible Currency (MLC) has dropped to 250 CUP. The country is grappling with inflation and shortages of essential goods, and this currency drop coincides with growing frustration among the private sector due to recent government-imposed restrictions.
Impact of Government Regulations on the Economy
The recent implementation of Resolution 56/2024 by the Ministry of Domestic Trade severely limits wholesale trade, threatening the survival of Micro, Small and Medium Enterprises (MSMEs), non-agricultural cooperatives (CNA), and self-employed workers (TCP). The new regulation mandates that these entities conduct business exclusively through state-run or government-controlled commercial enterprises.
Additionally, it imposes strict deadlines of 90 days for license updates and 120 days for liquidating wholesale inventories. Non-compliance results in harsh penalties, including fines, confiscations, and the cancellation of operational licenses.
Challenges of Economic Volatility
The current drop in the dollar's value could be temporary due to the inherent volatility of the informal market and the island's overall economic conditions. External factors, such as the influx of remittances or political decisions, might influence the dollar's exchange rate in the short term.
Meanwhile, Cubans continue to face the hardships of a crisis-ridden economic system where the dollar remains a significant concern for many families struggling to access food during the year-end holidays.
Recent reports highlight that a pound of pork has surpassed 1,400 pesos in the informal market, rendering it a luxury for most people despite being a staple for festive occasions. Other basic dietary staples have also seen substantial price hikes.
Soaring Food Prices and Economic Hardship
Local rice is sold at approximately 200 pesos per pound, while black and red beans fetch up to 450 pesos per pound. These prices are prohibitive, especially considering the minimum monthly wage in Cuba is just 2,100 pesos.
The situation worsens with the removal of subsidies for basic food items, leaving many families unable to access essential products at affordable prices. Although the government recently assured that the ration book will be sustained through 2025, it provides little relief.
In this context, the decline of the dollar in the informal market does not translate into tangible improvements for the populace. The purchasing power of Cubans continues to dwindle, and the year-end festivities are overshadowed by uncertainty and the inability to maintain cherished culinary traditions.
Frequently Asked Questions about Cuba's Economic Situation
Why has the U.S. dollar fallen below 300 pesos in Cuba?
The U.S. dollar has dipped below 300 pesos due to significant economic fluctuations and recent government-imposed restrictions affecting the economy.
What are the implications of Resolution 56/2024 for Cuban businesses?
Resolution 56/2024 limits wholesale trade, forcing businesses to operate through state-run entities, and imposes strict deadlines and penalties for non-compliance.
How are rising food prices affecting Cubans?
Soaring food prices are making basic staples unaffordable, exacerbating the financial strain on families already struggling with low wages and the removal of subsidies.