This Tuesday, the value of the Freely Convertible Currency (MLC) experienced a sharp drop of 25 pesos in Cuba's informal market, positioning it at 485 Cuban pesos (CUP), according to data gathered by elTOQUE.
Contrasting Stability of Dollar and Euro
Unlike the MLC, both the dollar and the euro have maintained stability for three consecutive days at their record highs, with the dollar at 695 CUP and the euro at 800 CUP since Sunday.
These figures highlight an unprecedented surge during June. The dollar began the month valued at 585 CUP, climbing 110 CUP (+18.8%) in just three weeks. Similarly, the euro started at 645 CUP, ascending by 155 pesos (+24%) in the same timeframe.
The Currency and Finance Observatory (OMFi) from elTOQUE had anticipated a cap of 650 CUP for the dollar throughout June, a ceiling that was surpassed by June 12, 18 days earlier than expected.
The Unpredictable Nature of the MLC
The decline of the MLC this Tuesday isn't an isolated incident. Introduced by the Cuban regime in 2020 with a theoretical parity of 1 MLC = 1 dollar, this electronic currency has displayed erratic behavior throughout June. It rose from 405 to 510 CUP in the first ten days, dropped to 500 CUP by June 16, returned to 510 CUP on Monday, and now falls to 485 CUP.
On Monday, the informal market's MLC offer ranged between 430 and 570 CUP, a 140-peso spread illustrating the profound uncertainty about its future. Many Cubans now perceive that the government might eliminate the currency without providing clear assurances to those holding balances, and fewer establishments accept it as payment.
A Widening Exchange Gap
The disparity between the informal market and the official rate set by the Central Bank of Cuba (BCC/CADECA) has reached alarming levels. The informal market's exchange gap now stands at 130 CUP per dollar (informal: 695 vs. official: 565) and over 153 CUP per euro (informal: 800 vs. official: 647).
Back in January 2026, this gap was merely 71 CUP per dollar; in six months, it has nearly doubled. From a historical perspective, the scale of the collapse is stark: in 2020, the dollar traded at approximately 42 CUP in the informal market. Today, it stands at 695 CUP, reflecting a loss of over 95% of the Cuban peso's value in six years.
Economist Elías Amor has warned that Cuba's fiscal deficit exceeds 12% of GDP and that the structural shortage of foreign currencies will continue to drive upward pressure. "No foreign currencies will enter Cuba in the coming months," he noted, adding, "The issue is that needs can be met with foreign currencies, and people will be willing to pay whatever it takes for them."
The currency outlook in Cuba remains shrouded in uncertainty: the dollar and euro hover at historical peaks, the Cuban peso is undergoing an unprecedented decline, and the reforms announced by the regime have yet to reverse the trend.
Understanding Cuba's Currency Crisis
What is the MLC in Cuba?
The MLC, or Freely Convertible Currency, is an electronic currency introduced by the Cuban government in 2020, initially pegged theoretically to the US dollar at a 1:1 ratio.
Why is the MLC experiencing fluctuations?
The MLC's fluctuations are due to erratic market behaviors and increasing uncertainty about its future, influenced by government policies and market reactions.
How is the exchange gap affecting Cuba's economy?
The widening exchange gap between the informal and official rates exacerbates economic instability, diminishing the purchasing power of the Cuban peso and fueling inflation.