Cuba's currencies
Jan. 6th, 2005 12:21 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
frandroidBefore 1993, the U.S. dollar was forbidden in Cuba. If you were caught with a single US dollar on you, you could go to jail for a year or two. But in 1993, in the middle of the "period especial" following the end of Soviet subsidies, Castro opened up the Cuban economy to U.S. dollars. This led to a massive influx of tourists and other stuff.
Thing is, US dollars became so prevalent that a parallel dollar economy started flourishing in Cuba. At some point the government introduced the Convertible Peso. One Convertible Peso is equal to one US dollar. The purpose of the Convertible Peso is that a "dollar economy" can still exist in Cuba, while the government itself retains all actual foreign currency.
Of course, there is also the "local" cuban peso, the "moneda nacional", which most cubans use in their day to day life. When the U.S. dollar was introduced in 1993, it (and conversely the Convertible Peso) exchanged to 120 cuban/local pesos. This rate came down over the years, and now the Convertible Peso trades to 26 local pesos.
The U.S. dollar actually became so popular that many state-owned businesses, mainly in the tourism industry, started trading between themselves in U.S. dollars. The gov't in Habana had some problems with that, so last year it mandated state businesses to trade between themselves in convertible pesos.
Another factor also became important: The U.S. government, under GWB, started tightening the screw on Cuba. The gov't actually passed a law forbidding foreign banks from dealing in U.S. dollars with Cuba. I think that if they do so, they can't operate in the U.S. or some such other nonsense.
So in response to that move, Cuba introduced a new money exchange policy: U.S. dollars now trade at a 10% penalty on the Convertible Peso. One Convertible Pesos is still equivalent to one US dollar, but in order to escape the 10% penalty, you must use a different currency to purchase the convertible peso at that rate, such as the Canadian Dollar or the Euro. So now Cuba is less dependent on U.S. currencies that it was before, although the drop in value in the U.S. dollar surely has affected it.
Another quirky cuban currency thing:
Cuba has a 3-peso note, both in its Convertible and Moneda Nacional currencies. It has no 2-peso notes. There's no efficiency reason calling for a 3-peso note that I know of, so I guess they just wanted to be quirky. Che Guevara is on both 3-peso notes. Some hustlers will offer you a 3-peso Che note and offer to get three convertible peso for it. The trick is that they are offering you the local peso, so if you go on with the exchange, the hustler just made a 2600% profit on the exchange.
Worse could happen though. A couple Norwegians staying at the same place as us in La Habana thought they were getting a deal when they traded US$80 for a 100 convertible peso note. The guy shows it to me and asks me "do you think it's real?" One look at it and I call it: "it's a fake". My partner looks at it and says "I can see the watermark, it must be real!" To which I respond: "yes, it's a real one peso note." Through some very clever designs, the 1-peso note had been "converted" into a 100-peso note. Ha ha. Now talk about real profit.
Thing is, US dollars became so prevalent that a parallel dollar economy started flourishing in Cuba. At some point the government introduced the Convertible Peso. One Convertible Peso is equal to one US dollar. The purpose of the Convertible Peso is that a "dollar economy" can still exist in Cuba, while the government itself retains all actual foreign currency.
Of course, there is also the "local" cuban peso, the "moneda nacional", which most cubans use in their day to day life. When the U.S. dollar was introduced in 1993, it (and conversely the Convertible Peso) exchanged to 120 cuban/local pesos. This rate came down over the years, and now the Convertible Peso trades to 26 local pesos.
The U.S. dollar actually became so popular that many state-owned businesses, mainly in the tourism industry, started trading between themselves in U.S. dollars. The gov't in Habana had some problems with that, so last year it mandated state businesses to trade between themselves in convertible pesos.
Another factor also became important: The U.S. government, under GWB, started tightening the screw on Cuba. The gov't actually passed a law forbidding foreign banks from dealing in U.S. dollars with Cuba. I think that if they do so, they can't operate in the U.S. or some such other nonsense.
So in response to that move, Cuba introduced a new money exchange policy: U.S. dollars now trade at a 10% penalty on the Convertible Peso. One Convertible Pesos is still equivalent to one US dollar, but in order to escape the 10% penalty, you must use a different currency to purchase the convertible peso at that rate, such as the Canadian Dollar or the Euro. So now Cuba is less dependent on U.S. currencies that it was before, although the drop in value in the U.S. dollar surely has affected it.
Another quirky cuban currency thing:
Cuba has a 3-peso note, both in its Convertible and Moneda Nacional currencies. It has no 2-peso notes. There's no efficiency reason calling for a 3-peso note that I know of, so I guess they just wanted to be quirky. Che Guevara is on both 3-peso notes. Some hustlers will offer you a 3-peso Che note and offer to get three convertible peso for it. The trick is that they are offering you the local peso, so if you go on with the exchange, the hustler just made a 2600% profit on the exchange.
Worse could happen though. A couple Norwegians staying at the same place as us in La Habana thought they were getting a deal when they traded US$80 for a 100 convertible peso note. The guy shows it to me and asks me "do you think it's real?" One look at it and I call it: "it's a fake". My partner looks at it and says "I can see the watermark, it must be real!" To which I respond: "yes, it's a real one peso note." Through some very clever designs, the 1-peso note had been "converted" into a 100-peso note. Ha ha. Now talk about real profit.
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no subject
Date: 2005-01-06 06:10 pm (UTC)I guess we wait for Castro to bite the dust (And Bush's administration to end its term) and see what happens.
no subject
Date: 2005-01-06 06:18 pm (UTC)Another factor also became important: The U.S. government, under GWB, started tightening the screw on Cuba. The gov't actually passed a law forbidding foreign banks from dealing in U.S. dollars with Cuba. I think that if they do so, they can't operate in the U.S. or some such other nonsense.
So in response to that move, Cuba introduced a new money exchange policy: U.S. dollars now trade at a 10% penalty on the Convertible Peso. One Convertible Pesos is still equivalent to one US dollar, but in order to escape the 10% penalty, you must use a different currency to purchase the convertible peso at that rate, such as the Canadian Dollar or the Euro. So now Cuba is less dependent on U.S. currencies that it was before, although the drop in value in the U.S. dollar surely has affected it.
So unfortunate!
no subject
Date: 2005-01-07 02:13 am (UTC)I mean, that's like saying that Mexico and the U.S. have a similar culture. I think people in Portland and Mexico City would challenge that a bit. The main U.S. influence in Cuba has been through U.S. corporations and the puppet governments they had there since 1902. That's more political and economic influence than cultural.
no subject
Date: 2005-01-07 02:23 am (UTC)no subject
Date: 2005-01-07 03:55 am (UTC)