Cuba Business

Cuban Central Bank to control US dollar vs Convertible Peso exchange rate

Posted November 02, 2004 by publisher in Cuba Business.

Associated Press

Cuban Central Bank President Francisco Soberon said he is committed to ensuring the convertible peso remains on par with the U.S. dollar in the wake of his country’s currency replacing dollars as legal tender.

“It would be extremely unwise for us to change the one-to-one exchange rate after the Cuban people have shown such confidence in the Cuban government,” Soberon, responding to fears about a possible future devaluation of the Cuban currency, told The Associated Press in an interview late Monday night.

Since President Fidel Castro announced Oct. 25 that the communist nation was dumping the U.S. dollar as its No. 1 form of legal currency, many Cubans have privately expressed worries the convertible peso will later lose value.

“We have to keep the rate one-to-one to the dollar, and we are prepared to do that,” Soberon said.

Soberon also said authorities have been surprised at the large amounts of American dollars Cubans have changed over the past week to avoid a 10 percent surcharge taking effect on Nov. 8.

“It’s been above our expectations,” Soberon said of the quantities changed. “A lot of people are opening accounts in important amounts of money. We didn’t know how much people were saving under their mattresses.”

Soberon declined to estimate how much had been changed thus far, saying he didn’t want to provide ammunition for Cuba’s enemies. He did say that in the first week there had been 700,000 transactions to exchange dollars or open dollar accounts across the island of 11.2 million people.

Some independent analysts have estimated that several hundred million American dollars will be exchanged into convertible pesos during the two-week transition period.

“People are very bad about making calculations about Cuba’s economy and that makes me very happy,” Soberon said with a smile.

Last week, there were numerous reports of smaller money exchange operations in Havana shutting down early after their daily allotment of 50,000 convertible pesos ran out.

Nevertheless, Soberon insisted that Cuba “without doubt” had enough convertible peso currency printed to meet the demands of those dumping dollars.

After Nov. 8, banks and exchange houses will levy a 10 percent surcharge to change dollars into convertible pesos, but dollars can be bought with convertible pesos at no extra charge.

Soberon said the 10 percent charge was not an attempt to increase foreign exchange, but a way to discourage people from bringing or sending in more dollars.

“The greatest sign of success for these measures would be if we don’t collect a single cent of the surcharge,” he said.

Cuba has said the measure is necessary to protect the country from an increasing U.S. crackdown on foreign banks sending dollars to Cuba.

The U.S. Federal Reserve in May fined Switzerland’s largest bank, UBS AG, $100 million for allegedly sending American dollars to Cuba, Libya, Iran and the former Yugoslavia in violation of U.S. sanctions.

By eliminating the U.S. dollar as primary form of legal tender at stores and businesses, Cuba is less vulnerable, said Soberon. “And we are completely sovereign in terms of our monetary policy.”

Soberon downplayed the impact the measures could have on family remittances, most of which traditionally have been sent from the United States in American dollars to relatives on the island.

Now, those sending the cash transfers will have to send the funds in a different foreign currency, such as euros or Canadian dollars, or the recipient in Cuba will have to pay a 10 percent surcharge to change the newly received American dollars into local currency for use at stores.

While some estimates place Cuba’s remittances as high as $1 billion annually, those family cash transfers are just a fraction of the $9.3 billion in foreign exchange that flows into Cuba each year, Soberon said.

“In the end, people will find a way to keep helping their families,” he said.

Soberon also downplayed predictions that the 10 percent surcharge will trigger a black market in money changing.

“The black market exists when you prohibit something,” Soberon said, emphasizing that the government has not banned Cubans from holding or changing dollars.

And if problems pop up later, he said, “we can always pass another resolution.”

Member Comments

On November 03, 2004, tprice2@student.gsu.du wrote:

how about this?

On November 04, 2004, Bethan Llewelyn wrote:

Helo, I will be comming to Cuba for a holiday from Wales UK in December, what currency should I bring with me?
Pounds, Euros or Cuban Peso?

On November 04, 2004, Petester wrote:

Same question.  Are American dollars a bad idea to bring for a tourist?

On November 06, 2004, Bruce Webb wrote:

Hello.  I am a Canadian and my friends and I will be coming to Cuba in December for two weeks.  If we bring Canadian currency, can we use it to pay for hotels, food, etc. or do we have to convert it to Cuban convertible pesos?  If we have to convert our Canadian dollars to convertible pesos, what is the exchange rate?

On November 13, 2004, Sara wrote:

Le prime due settimane del prossimo dicembre verrò in vacanza a Cuba. Vorrei sapere se per me è più vantaggioso portare Euro o dollari US ? Resto in attesa di una vostra pronta comunicazione.
Distinti saluti

On November 13, 2004, Sara wrote:

Le prime due settimane del prossimo dicembre verrò in vacanza a Cuba. Vorrei sapere se per me è più vantaggioso portare Euro o dollari US ? Resto in attesa di una vostra pronta comunicazione.
Distinti saluti

On December 01, 2004, juliec wrote:

i’m coming for a holiday to cuba in feb 2005, what currency will i be able to use.

On March 27, 2005, havana journal wrote:

Buon giorno, il 31/03/2005 parto per Cuba e desidero sapere se pi conveniente portare Dollari oppure Euro. Distinti saluti, Ada

On March 25, 2010, Tracey wrote:

I have been to Cuba several times.  I am from Canada.
CUC is an international currency code (ISO 4217) for Cuban Convertible
Peso. Cuban Convertible Peso is one of two official currencies used in Cuba
This is how the money works. 
-as a tourist you will use cuban convertible pesos (CUC)
-only tourist areas accept CUC
-if you go out of the tourist area you will need to use Cuban Pesos (CUP)
-it is recommended to not exchange U.S. currency for CUC or CUP as they tack on an 11% (approx) service charge.  They are not fond of U.S. currency
-you may exchange your euros, canadian dollars, U.S dollars for CUC/CUP
Here’s a list of sample exchange rates (Valid January 2009):

1.00 EUR = 1.22177 CUC (Euro)
1.00 CAD = 0.756105 CUC (Canadian Dollar)
1.00 CHF = 0.812825 CUC (Switzerland Francs)
1.00 GBP = 1.30107 CUC (British Pound Sterling)
1.00 JPY = 0.0103551 CUC (Japanese Yen)
1.00 RUB = 0.0282358 CUC (Russian Ruble)
1.00 USD = 0.925900 CUC (US Dollar, subject to additional 10% Cuban tax on top of this exchange rate)

You can only purchase CUC or CUP in Cuba itself.  Their currency does not go in and out of their country.  They will not exchange your change.  Also be sure that your money does not have any tears or pieces out of it.  They always examine it before they will exchange.  It should look like new.  Best place to buy your CUC/CUP is at the airport in Cuba.  I have found that when you exchange it in the hotel they charge very high rates and if you don’t know the rates they will rip you off.  It has happened many times to me.  When you leave the country they will exchange their currency back to your currency.

Here is a link to an updated currency exchange website

On March 25, 2010, manfredz wrote:

Tracey.  Your information is mostly correct but may I mention a few things.
Although as a tourist you will use mainly CUC in the tourist areas, you will also have to pay in CUC for many things in non touristy areas; similarly Cubans will pay in CUC for many things (shops that sell imported goods, Viazul bus etc).
Banks and cadecas (incl the one at airports) will give a better rate than hotel desks who often offer 5-10% less.  Having a calculator handy and making sure you get a receipt will often avoid miscalculations by exchange desk staff.
Although you can exchange any unused CUC back you’ll get 10-15% less so its best to exchange as you go.
If you plan on returning to Cuba, you may want to consider taking any unused CUC with you (although you can legally take out only up to 100 CUC, no one is counting)