Cuba has more than one peso
Cuba has always been known as one of the hottest travel destinations in the Caribbean. Before the 1959 revolution, Americans loved to visit Cuba. The island is filled with exotic beaches, fabulous hotels and casinos that never close. Since the revolution, Cuba has been subjected to U.S. travel, and trade embargoes. The value of the American Dollar went to zero after the revolution and Cuba’s economy suffered a dramatic decline. Cuba decided to link their Peso with the Soviet Union’s Ruble when U.S. relations broke down and that moved stimulated their economy. Tourism became Cuba’s main industry, replacing sugar cane as the main source of revenue.
When the Soviet Union collapsed in 1991, Cuba’s economy collapsed again. In order to pull out of a social and economic nightmare, the Central Bank of Cuba decided to fix the rate of what’s called the Convertible Peso to the U.S. Dollar. The rate was fixed at 1 CUC equals 1 USD. Then in 2004, the Cuban government decided that U.S. Dollars were no longer legal tender and all transactions in hotels, restaurants and shops would have to be done using the new Convertible Peso. The Peso Nacional is the local currency that Cuban citizens use to make local purchases. They get paid in both currencies, but the Peso Nacional is not used for everything. The Convertible Peso is used just like the American Dollar which was used before it was banned from the country. In fact, some people call the Convertible Peso the Dollar.
In 2005, the Cuban Government decided to revalue the Convertible Peso against all currencies by 8%. Instead of an exchange of 1 CUC equals 1 USD, it became 1 CUC equals 1.08 USD. In May of 2006, the Convertible Peso was revalued again by 3% and a 10% tax was imposed on any transaction that included U.S. Dollars, so now if a tourist wants to exchange U.S. Dollars for Pesos, it’s expensive. U.S. bank credit cards are no longer accepted in Cuba, but credit cards from other countries are accepted.
Other currencies like the Canadian Dollar, British Pound Sterling, the Japanese Yen, the Euro, the Swiss Franc and Mexican Pesos can still be exchanged for Convertible Pesos in Cuba without the 10% tax, so Americans who want to travel to Cuba should exchange their Dollars into another currency and then make the exchange to Convertible Pesos. Banks do charge 3% on all exchange transactions, plus the 8%, but that’s still better than paying another 10% for a straight Dollar to Peso exchange.
Valuable currency tips when traveling to Cuba
Canadians have been traveling to Cuba since the 1970s and have learned some valuable lessons when it comes to saving money in exchanges. Convertible Pesos are only available in Cuba. Always bring a calculator, so you know how many CUC you should receive when you make the exchange and ask for a printed receipt. Exchanging currency at the airport is more expensive than using a Cuban bank or the CADECA Money Exchange. Exchanging money on the street in Cuba is usually a scam, ripping off tourists is an every day event for some locals. If you exchange money in a hotel, be prepared to pay for the convenience, it’s an extremely expensive transaction.
There is a huge counterfeit Convertible Peso market in Cuba, so only exchange money at banks to avoid fake currency. You can exchange your left over Pesos at the airport before you leave, but don’t expect to get a decent exchange rate. Try to use the money you have exchanged before you leave the country, but save enough to pay the $25 Convertible Peso departure tax before you get on the plane.
This article was provided by the experts at ForexTraders.com. For additional information and countless articles on currency trading and visit the site.