Caribbean & Central America - January 2026

On 18 December the Cuban government devalued the peso by creating a third exchange rate, which, along with the increasing dollarisation of the economy, it described as a temporary stabilising measure. Yet many economists remain unconvinced.

Cuba’s central bank (BCC) said the third official exchange rate would be initially set at 410 Cuban pesos (CUP) to a dollar, close to current black-market valuations. Analysts said this represented a devaluation of 30% or more. The new peso/dollar rate will sit alongside the two existing official rates of 24 and 120CUP to the dollar. The existing official rates apply to state-run companies and transactions deemed to be “essential and strategic”. Ian Pedro Carbonell, a BCC official, said the new rate would stimulate exports and offer citizens “an attractive exchange rate that will allow them to obtain more national currency without the risks of going to the black market”. The new rate will be adjusted “periodically”. The government says it remains committed to eventually unifying the three rates. It has also announced a liberalisation of foreign-currency bank accounts.

The track record for the use of multiple exchange rate regimes in Latin America to help economic stabilisation is not good. In places like Argentina and Venezuela they have been associated with market manipulation and corruption achieved by obtaining dollars at low “official” prices and reselling them at much higher market or informal rates. Cuban economist Mauricio de Miranda says the current policy mix of fixed and fluctuating exchange rates is long term “unsustainable”, as it favours certain state and military owned companies while distorting the rest of the economy. Another economist, Pedro Monreal, says that currency unification will only be possible if there is much further and deeper devaluation of the official peso rates. He describes future devaluation of the CUP24 rate as “100% likely” and the chances of devaluation of the CUP120 rate as “very high”.

It doesn’t help that the wider Cuban economy is being hit by multiple levels of bad news. Concerns over corruption were reinforced by the announcement in December 2025 that former economy minister Alejandro Gil (2018-2024), dismissed in 2024, has been sentenced to life imprisonment on espionage and corruption charges. The ruling Partido Comunista de Cuba (PCC) has postponed its ninth congress, initially scheduled for April 2026, to an unspecified future date because of the economic crisis. Over Christmas and the New Year, the island economy limped on with power cuts running at 40%-50% of capacity. US military action in Venezuela and the associated tanker ship seizures were expected to further reduce the island’s oil supplies and ramp up uncertainty.

Tourism

Tourism, a key source of foreign currency in Cuba, remains weak. Cuba’s national statistics office (Onei) reports that tourist arrivals fell by 19% in the first 11 months of 2025, indicating that the sector remains well below levels registered prior to the coronavirus (Covid-19) pandemic which struck in 2020.