Cuban Peso Weakens Sharply as U.S. Dollar Surges Amid Market Turmoil and Trump’s Tough Stance
Havana — The U.S. dollar has soared to its highest informal market levels in Cuba in weeks as political tensions and economic uncertainty mount, driven by recent remarks from former U.S. President Donald Trump and escalating regional geopolitical turmoil. This surge reflects deepening concerns about the island’s financial stability and the future of its already fragile currency, the Cuban peso (CUP).
Dollar Hits Record Levels in Informal Markets
In Cuba’s informal foreign exchange market, the U.S. dollar continues its upward trajectory, trading at around 460 Cuban pesos (CUP) per dollar — its peak level since early December 2025 — according to independent observatories tracking unregulated currency exchanges.
Data from early January showed the dollar trading near 445–448 CUP before this latest jump, with the euro also strengthening against the peso. Analysts say this reflects growing mistrust of the national currency and a broad flight to hard currencies amid political and economic shockwaves.
Political Tensions Amplify Economic Anxiety
The market reaction comes amid rising political tensions between Havana and Washington. Former U.S. President Donald Trump has intensified pressure on the Cuban government — urging the island to “make a deal, before it is too late” and signaling an end to Venezuelan oil and financial support that has been crucial to Cuba’s economy.
Trump’s comments follow the U.S. military capture of Venezuelan President Nicolás Maduro earlier this month — a major geopolitical shock for the Caribbean region. Venezuela has historically been Cuba’s main supplier of subsidized oil, covering around half of the island’s energy needs.
With that support now in question, Cuba faces widening fuel shortages, worsening economic conditions, and mounting uncertainty about future imports. Cuban President Miguel Díaz-Canel has responded defiantly, rejecting foreign intervention and affirming the country’s sovereignty, even as inflation and scarcity bite deeper into everyday life.
Currency Markets Reflect Deepening Distrust
Economists note that Cuba’s informal currency market — where most citizens actually buy and sell dollars and euros — increasingly diverges from official exchange rates set by the Cuban Central Bank. While the government publishes official rates (often far lower than reality), the “street rate” is driven by supply and demand, scarcity of foreign currency, and investor confidence.
This gap between official and informal rates has widened dramatically in recent months. Some independent market trackers report that hard currencies like the dollar and euro now trade at multiples of the official values, underscoring the depth of the economic distortion.
The surge has immediate real-world consequences: as the peso weakens, prices for imported goods (including food, medicine, and fuel) climb, pushing inflation higher and eroding household purchasing power. Many Cubans — who earn income in CUP but must buy essentials priced in dollars or euros — feel the sting of the currency slide most acutely.
Historical Dollarization and Structural Pressures
Cuba’s economic troubles are not new. Over the past decade, the country has faced chronic foreign currency shortages, inflationary pressures, and the gradual informal dollarization of parts of its economy. In late 2025, the government even legalized expanded use of foreign currencies in commercial transactions — a controversial move that reflected persistent peso weakness and the need for hard currency inflows.
Despite these efforts, structural imbalances remain. The peso has lost credibility among many Cubans, who increasingly seek refuge in U.S. dollars and euros as a store of value. This trend accelerates when political uncertainty spikes — such as after dramatic regional events or provocative international statements.
What Comes Next?
Looking ahead, analysts say the dollar’s climb could continue if political pressures persist and if foreign currency inflows — from tourism, exports, or remittances — fail to stabilize.
For ordinary Cubans, the implications are immediate: shrinking purchasing power, more expensive imports, and greater economic hardship just as hopes for a political breakthrough remain uncertain.
While the Cuban government seeks to manage these pressures, market dynamics — driven by both domestic policy choices and international relations — suggest that the dollar’s ascent could persist unless confidence in the peso is substantially restored.
Acerca del autor
