Since late 2024, speculation has swirled among Cubans about the potential disappearance of the freely convertible currency (MLC), despite official assurances that retail stores and other services operating in that currency would remain in place.

Still, the rapid expansion of dollar-only stores—where MLC is no longer accepted—has sparked widespread anxiety, particularly among those watching the value of their MLC accounts, often referred to as “bank dollars,” erode.

According to the Cuban Observatory of Currencies and Finance (OMFi), while partial dollarization brings liquidity and financial stability to certain sectors, it also deepens market segmentation and inequality.

At the same time, demand for foreign currencies like the U.S. dollar and the euro continues to rise, while both the MLC and the Cuban peso lose purchasing power. “As interest in holding or spending MLC and pesos declines, so does their demand in the informal exchange market, driving further devaluation,” OMFi explained.

Pavel Vidal, lead researcher at OMFi and an economist, notes that the rising cost of foreign currency makes it even harder for families to access dollarized markets, especially those dependent solely on peso incomes. For many, buying dollars with pesos is now nearly impossible.

Dollarization is gaining traction, and government promises are beginning to falter. Although authorities initially stated that only 7% of Caribe stores would operate in dollars, new reports suggest the actual number will be significantly higher, and that's without counting outlets under the Cimex corporation. elTOQUE has compiled a list of dollar-only stores confirmed by its reporting team.

Even those receiving their income in MLC have seen their purchasing power decline. As the currency devalues, its equivalence to the dollar drops. In March alone, the MLC lost 3.5% of its value against the Cuban peso and 7.6% against the U.S. dollar, according to OMFi estimates.

After a spike in MLC purchases to capitalize on price differences in certain consumer markets—cigarettes, for example—many are now trying to offload their MLC holdings or sell them at current market rates.

Forecast models for April 2025 project a modest increase in the value of the dollar and the euro in the informal market, between 2.5% and 4.8%, along with a corresponding drop in the value of the MLC. By April 30, the exchange rate is expected to range between 262 and 255 CUP per MLC, depending on the scenario.

The continued operation of MLC stores—some of which have recently improved their stock of domestic products—suggests the currency is not disappearing just yet.

Nevertheless, OMFi advises keeping savings in foreign currencies as a key strategy to protect value amid rising prices for goods and services.

Informal Market Uncertainties

Some Cubans are now asking how a potential resurgence of trade tensions under the Trump administration could impact the local economy. OMFi points out that global inflation and a possible economic slowdown triggered by tariffs could affect Cuba indirectly.

However, the report notes that domestic factors remain more decisive: U.S. sanctions, internal inefficiencies, the flaws of the state-run economic model, and the yet-to-be-implemented macroeconomic stabilization and structural reform programs proposed by the government.

Cubans have started calling the balance on their Clásica card “CLA.” Recently, it was confirmed that transfers between these Fincimex-issued cards are now possible, though only through the EnZona platform. This new feature could reshape the informal currency exchange market, although its broader impact remains to be seen.

Despite an annual slowdown, real inflation—which exceeds official figures—remains high. It reflects deep economic imbalances that continue to drive up prices in consumer markets. The result is a steady erosion of purchasing power for salaries and pensions, worsening poverty for many families.

The problem is compounded by the rise of dollar-denominated goods and services, accessible mostly to those receiving remittances. With banks facing a liquidity crunch, a large portion of the population remains excluded from dollar markets and left in increasingly precarious conditions.

As demand for dollars climbs, exchange rates for foreign currencies as of late March 2025 aligned closely with OMFi’s prior forecasts. High demand for dollars and euros in monitored markets led, as predicted, to a moderate appreciation of both currencies—around 4% for the month.

By April 30, exchange rates are projected to hit 364–372 CUP per USD and 370–377 CUP per EUR, under the baseline and high-end scenarios, respectively. These forecasts are consistent with ongoing dollarization and persistent—albeit more moderate—inflation compared to previous years.

OMFi cautions that its projections depend on the Cuban government’s next moves regarding currency allocation and distribution mechanisms. Meanwhile, any policy shifts from the Trump administration regarding sanctions could further destabilize the informal exchange market.