After a Pause Caused by Melissa, the Dollar Rises Again – Havana Times

After a brief lull in the informal Cuban FX market — when the dollar tumbled from 490 to 410 pesos — the U.S. currency is climbing again. Despite renewed official efforts to discredit the outlet that tracks street rates, prices have resumed their upward march: from 415 on Saturday to 420 on Sunday and 430 pesos per dollar on Monday.

Attempts to discredit rate tracking fall flat

Authorities have intensified their campaign against the platform that publishes daily informal exchange rates, accusing it of manipulation and of trying to usurp the Central Bank’s role. Yet the service continues to detail its method: it compiles buy and sell offers from classified ads, social media posts, and user submissions gathered each day.

What the latest data shows

Weekend figures illustrate the trend. A distribution of published offers clustered between 410 and 430 CUP per USD, with a midpoint around 420. The average price — 421.81 CUP — sits slightly above the median, a small but telling gap that points to upward pressure as more sellers begin to test higher asking prices.

Another view tracks declared supply and demand over time. Based on quantities users report, it reveals rising purchase interest and shrinking sales toward the end of October. Because not all offers include precise amounts, these volumes represent a minimum detectable level; true market activity is likely larger. The pattern — more buyers, fewer sellers — typically foreshadows further increases if the imbalance persists.

Supply, demand, and expectations

Analysts repeatedly emphasize that the street rate moves with the balance of supply and demand. When the need for dollars, euros, or MLC outstrips availability — whether for imports, travel, or safeguarding savings from inflation — prices in pesos go up. When supply briefly exceeds demand, the rate can ease.

Expectations also matter. Rumors of new sanctions, potential rule changes for private businesses, shifts in remittances or banking operations, and monetary policy signals can all sway behavior. Liquidity constraints and financial regulations amplify these swings.

Why the brief drop?

Several specialists link last week’s fall to Hurricane Melissa’s aftermath: a short-term inflow of foreign currency and donations aimed at helping families and recovery efforts. Once that pulse faded, underlying pressures reasserted themselves.

A crisis with no quick exit

In an October analysis, economist Pavel Vidal noted that the island’s economic crisis shows no near-term resolution and warned that, in an extreme scenario, the dollar could even surpass 500 pesos by the end of the month — a level the market approached before the recent dip.

Regardless of week-to-week fluctuations, the drivers of the peso’s devaluation remain in place:

• A prolonged slump in tourism, a key source of foreign exchange.
• Expansion of dollarized retail, where hard currency is the only way to buy many goods.
• An energy crisis and scarce access to inputs and financing, which curb production and deepen dependence on imports.
• Weak confidence in the economic outlook and in policy responses, encouraging capital flight and savings in stronger currencies.

What to watch next

Market direction hinges on whether demand keeps outpacing supply. If purchase requests stay elevated while offers dry up, the peso is likely to weaken further. Conversely, a sustained rise in remittances, a tourism rebound, credible policy steps that rebuild confidence, or improved access to external financing could bring relief — at least temporarily.

For now, the latest readings signal renewed upward momentum for the dollar after Melissa’s brief pause.