What Happened to Panama’s Currency After Noriega — Could Venezuela & Cuba Be Next?
When Manuel Noriega was removed from power in Panama after the 1989 U.S. invasion, Panama’s currency system became even more tied to the U.S. dollar. Panama already used the U.S. dollar alongside its local currency, the balboa, but after Noriega’s removal, confidence in the U.S.-backed financial structure increased and the country moved further into a dollarized economy. The stability of the dollar helped Panama rebuild confidence in banking and foreign investment relatively quickly.
Some analysts believe a similar scenario could theoretically happen in Venezuela if there were a major political transition. Venezuela’s currency, the Bolívar, has suffered from years of inflation and instability. If a new government aligned more closely with the United States and international financial institutions, the country could potentially move toward partial or full dollarization, greater foreign investment, and a stronger, more stable financial system. However, Venezuela’s situation is far more complex because of its larger population, political divisions, sanctions, and dependence on oil revenues.
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VES / CUP Investment Overview
Investing in the Venezuelan Bolívar (VES) and the Cuban peso (CUP) right now is extremely speculative and very risky. These are not traditional investments like stocks, bonds, or even stable emerging-market currencies. In both cases, the governments tightly control the currencies, inflation remains severe, and ordinary citizens often prefer holding U.S. dollars instead of their local currencies.
For the Venezuelan Bolívar, the main issues are inflation and devaluation. Venezuela has experienced years of hyperinflation, and even though oil production has improved somewhat, the Bolívar continues losing purchasing power rapidly. Reuters recently reported annual inflation near 618%, while multiple reports show the currency continuing to weaken against the U.S. dollar. (Reuters) In practice, many Venezuelan businesses already operate informally in dollars because they do not trust the Bolívar long term. There is also a major gap between the official government exchange rate and the black-market exchange rate, which creates uncertainty for anyone trying to speculate on the currency. (Albis)
The potential profitability of the VES mainly comes from one theory: if Venezuela fully stabilizes politically, massively increases oil exports, reduces inflation, and restores confidence in the financial system, the currency could strengthen from extremely depressed levels. Some investors speculate that future oil wealth and sanctions relief could eventually support the Bolívar. Reuters reported new dollar inflows tied to oil exports and U.S. policy shifts aimed at stabilizing Venezuela’s economy. (Reuters) However, this would likely require years of consistent economic reform. The much larger risk is continued devaluation, meaning an investor could lose purchasing power very quickly even if the number of Bolivar's they hold increases.
The Cuban peso faces similar but slightly different problems. Cuba is struggling with shortages, energy problems, weak productivity, and multiple exchange-rate systems. The government has repeatedly adjusted the official exchange rate because the informal market values the peso far lower than the state rate. (Prism Media) Reports from recent weeks show the U.S. dollar trading above 500 CUP in informal markets, reflecting a major collapse in confidence in the currency. (CubaHeadlines)
The profitability argument for the CUP is also based on speculation that Cuba could eventually open its economy more aggressively, encourage foreign investment, or move toward broader dollarization and financial reform. Some analysts argue that if Cuba modernized its economy and normalized access to foreign capital, the peso could eventually stabilize. (CubaHeadlines) But at the moment, the trend has been persistent depreciation rather than recovery.
One of the largest practical problems with both currencies is liquidity and convertibility. Even if someone accumulates VES or CUP cheaply, converting large amounts back into U.S. dollars later may be difficult, especially if governments impose tighter controls. In addition, black-market pricing often dominates reality on the ground, meaning official numbers may not reflect what ordinary people or businesses actually pay. That creates enormous uncertainty for investors.
In simple terms:
The upside case: political stabilization, foreign investment, stronger oil or tourism sectors, reduced sanctions, and economic reform.
The downside case: continued inflation, government controls, shortages, weak confidence, and further currency collapse.
Right now, both currencies behave more like high-risk geopolitical speculation than traditional investments. The VES likely has greater theoretical upside because Venezuela has massive oil reserves and a larger natural-resource base. The CUP may face a longer road because Cuba’s economic structure is smaller and more centrally controlled.
For most investors, exposure to these currencies is considered extremely high risk, and many professional investors would avoid direct holdings entirely unless they were speculating with money they could fully afford to lose.
