The black market for foreign currency in Cuba started off on a turbulent note this Wednesday, August 19, with varying movements among the three main currencies.
At 10:00 a.m. local time, the euro experienced a significant drop compared to the previous day, while the U.S. dollar remained stable. Meanwhile, the MLC edged up, though its rate should be viewed cautiously due to the low volume of transactions backing it.
The Dollar Holds Steady
The U.S. dollar is trading at 663 Cuban pesos (CUP) on the informal market, unchanged from the previous day. This stability extends to a weekly comparison as well; a week ago, the greenback averaged 665 pesos, only 2 pesos higher than the current rate, marking a -0.4% change.
Over the past month, the dollar has hovered between a low of 663 and a high of 675 pesos, continuing to dictate the rhythm of the informal market amid a structural shortage of currencies.
Euro Declines
This Wednesday, the euro opened at 751 Cuban pesos (CUP), marking a decline of 6.5 pesos from the previous day when it was exchanged at 758 pesos. The downward trend is also evident in the weekly comparison; a week ago, the euro averaged 760 pesos, 9 pesos more than today (-1.2%).
Over the last 30 days, the European currency has fallen 14 pesos from the 765 it recorded a month ago, though this 30-day comparison may include methodology adjustments. The highest point in the last month was 790 pesos, while the lowest is currently 751.
The euro maintains its advantage over the dollar, buoyed by limited supply and demand from those receiving remittances from Europe, although recent sessions suggest a gradual correction is underway.
MLC Rises Cautiously
The MLC is trading around 488 Cuban pesos (CUP), a figure to be interpreted cautiously due to the low transaction volume recorded during this timeframe. Compared to the previous day, when it stood at 459 pesos, it has risen by 29 pesos (+6.3%).
In a weekly comparison, the increase is even more pronounced: a week ago, the MLC averaged 441 pesos, indicating a 47 peso rise (+10.7%) during that period. Over the last 30 days, it has fluctuated between a low of 413 and a high of 496 pesos.
Without physical existence, its use is limited to state-run stores that accept it, restricting its circulation compared to cash currencies.
Gap Between Informal and Official Rates
The official exchange rate from the Central Bank of Cuba (Segment III) is set at 631 CUP per dollar and 731 CUP per euro, significantly lower than the rates that prevail in the everyday informal currency market.
The disparity between the two markets is 32 pesos for the dollar and 20 pesos for the euro. While Segment III was introduced as a more flexible exchange mechanism, its official rates remain far from those in the informal market and fail to meet the population's real currency demands.
In the past month, the official dollar rate has climbed from 592 to 631 pesos, and the euro from 676 to 731 pesos, without bridging the gap with the parallel market. This discrepancy between official and informal rates reflects the persistent currency shortage in the state banking system and the high demand for dollars and euros by the populace, whether for emigration, importing goods, safeguarding savings, or making purchases in the private sector.
In a scenario of sustained inflation, low state salaries, and increasing partial dollarization of the economy, each shift in the informal market directly affects internal prices and the purchasing power of Cubans.
Frequently Asked Questions about Cuban Currency Exchange
Why is there a significant gap between the official and informal exchange rates in Cuba?
The gap is primarily due to the scarcity of foreign currencies in the state banking system and the high demand among citizens for dollars and euros, either for emigration, importing goods, or safeguarding savings.
How does the informal currency market impact the Cuban economy?
Fluctuations in the informal market affect internal prices and the purchasing power of Cubans, especially in a context of sustained inflation and low state salaries.