Why the Dollar and the Euro Rise & Fall vs the Cuban Peso
but never return to the same point
HAVANA TIMES – Since 2022, the exchange rate in Cuba’s informal market has shown high volatility. Within a matter of weeks, the price of the dollar or euro can soar, stabilize at a new high, and then fall sharply. However, it rarely returns to its starting point.
This behavior is not random. It responds to a phenomenon that economic theory calls overshooting — an excessive rise of foreign currencies following a shock in expectations or an economic announcement, followed by a partial, but not complete, correction.
The German economist Rudi Dornbusch described this effect in 1976. According to his model, when a country faces a sudden change — a new monetary policy, a devaluation, or a crisis of confidence — economic agents tend to overreact.
In the short term, the foreign currency rises more than what real fundamentals (inflation, fiscal deficit, reserves, exports, GDP) would justify. Later, when the market absorbs the true magnitude of the change, it corrects: the exchange rate falls, but not to the previous level. The new equilibrium is higher.
1. August–October 2022: The First Major Jump
After the announcement of the new foreign exchange purchase scheme at 120 Cuban Pesos (CUP) per dollar, the informal market responded with a sharp escalation. In just a few weeks, the dollar and the euro reached 200 CUP, driven by uncertainty and the lack of real supply. When expectations cooled, the exchange rate dropped to 165 CUP. It was the first clear overshooting: a speculative peak followed by a partial correction.
2. July–September 2023: The Overreaction Repeats
A year later, the same pattern repeated. The dollar and euro rose sharply to 215–225 CUP amid rumors about exchange policy adjustments and new controls.
By mid-September, a “reality check” set in and the market stabilized around 190–200 CUP — another typical correction after excessive expectations.
3. May–June 2024: Panic, Peak, and Adjustment
During the first half of 2024, the value of foreign currencies skyrocketed again, this time to nearly 400 CUP. The episode was amplified by what behavioral finance calls the “herd effect”: everyone buys because everyone is buying. Shortly after, an abrupt contraction pushed the dollar below 300 CUP. But this time there was a new element — the entry of the Cuban government’s “cyber combatants.”
In May 2024, more than 2,000 social media accounts began posting in a coordinated way against elTOQUE’s exchange rate, calling for users to post fake offers to interfere with the algorithm used for the rate calculation. Social networks were soon flooded with false listings offering cheap dollars, and for a few days the rate appeared to drop. In reality, it was a noise effect: people believed the price was falling, some sold, and the TRMI — which measures what happens in the real market, not in rumors — reflected that temporary distortion.
Afterward, the dollar climbed again.
2025: Fewer Peaks, More Trend
Unlike 2022, 2023, and 2024, in 2025 there hasn’t been an abrupt spike followed by a rapid drop (a classic overshooting), but rather a sustained rise in the value of foreign currencies over several months, reaching record highs for both the dollar and the euro.
In its latest bulletin, the OMFi warned that since September “to the demand for foreign currency for more commercial reasons (imports, travel, consumption in dollarized markets, etc.), speculative purchases have been added…” This opened the possibility that “downward corrections in rates could occur, something that often follows acceleration cycles fueled by expectations and subjective factors.”
The fall within a few days of the dollar’s value from 490 CUP to around 410 CUP could anticipate a new overshooting — the typical correction after an overbought period — or it may be more closely related to two simultaneous events: Hurricane Melissa’s impact on eastern Cuba and a new disinformation campaign by the Communist Party against the TRMI.
When Lies Bring Down the Dollar (For a While)
In recent days, messages celebrating the “achievement” have begun circulating in Facebook and WhatsApp groups: “The dollar collapses, thanks to the people!” or “Finally, the dollar has fallen — elTOQUE can’t manipulate anymore.”
But behind this apparent victory lies a story that also influences the temporary correction of the dollar’s value: a coordinated disinformation campaign designed to blame the messenger and confuse the audience.
Since October 22, 2025, a wave of messages with the phrase “No al TOQUE” (“No to elTOQUE”) began spreading. Hundreds of accounts — many newly created with AI-generated profile photos — repeated the same image and slogans across small business and buy-sell groups. Some profiles were anonymous; others shared the content repeatedly, every few minutes.
The pattern leaves no doubt: it was an organized operation. The goal was to create the impression of massive rejection and, above all, to question the legitimacy of the Tasa Representativa del Mercado Informal (TRMI) — the daily calculation that shows the real value of the dollar and euro in Cuba.
Campaigns like these don’t change the market’s fundamentals: they don’t create foreign currency, reduce inflation, or restore confidence. What they do is introduce confusion — like a puff of smoke passing in front of a thermometer. For a moment, the reading looks different, but the heat is still there.
The problem is that the TRMI shows what the government cannot hide. In a country without an official exchange market, the independent data on the dollar works like a mirror: it reflects distrust in the national currency, the constant decline in hard-currency income (worsened by the tourism crisis), the fragility of the productive system, and the lack of solutions to the imbalances that plague the economy.
For that reason, when the rate rises, the authorities don’t debate the causes — only the reflection.
Can a Disinformation Campaign “Lower” the Rate?
Yes, but only for a while.
Media noise can influence short-term expectations: if people believe the value of foreign currencies will fall, some stop buying, others sell out of fear or confusion, and this produces a temporary downward movement — a kind of self-fulfilling prophecy.
But Cuba’s informal market — as chaotic as it seems — ends up readjusting to reality: the scarcity of dollars, inflation, the fiscal deficit, and deep structural mistrust. When those conditions don’t change, the rate climbs again.
The campaigns of October 2025 and before in May–June 2024 have the same goal: to fabricate the illusion that with willpower — not with monetary supply — the market can be controlled. But the truth is, you can’t manipulate a market that already functions outside state control.
Every time the government or its networks try to discredit the TRMI, they only confirm its usefulness: people continue to look at that reference because it’s the only one that makes sense.
Disinformation campaigns can introduce temporary noise — small drops or rises induced by false posts — but they don’t alter the market’s direction.
The corrections of October–November 2025 combine the exhaustion of an upward cycle with the propaganda effect that heightens confusion and volatility. In the data we monitor in virtual spaces, we’ve observed increased dispersion in the exchange rates offered. The gap between the lowest and highest proposed rates for buying and selling shows that the campaigns don’t convince everyone — there’s no consensus about the peso’s recent appreciation.
The official narrative tries to capitalize on a technical breather to support its thesis, but the real fundamentals — inflation, deficit, capital flight, and productive crisis — remain unchanged.
The volatility of Cuba’s informal foreign exchange market reflects an economy without anchors and without solutions to the multiple crises dragging it down. In the absence of confidence, each new economic policy announcement triggers spikes, every correction is temporary, and each cycle leaves the Cuban peso a little weaker than before.
First published in Spanish by El Toque and translated and posted in English by Havana Times.