How does Cuba’s new exchange rate affect the Pound Sterling?

Question: How have the new exchange rates (March 14, 2011) affected the Pound Sterling? On checking the Xe.com conversion site, I get the same exchange rate as the last two previous years.

Answer: On March 14, 2011 the Cuban Central Bank restored parity between the Cuban convertible peso (CUC) and the U.S. dollar. This effectively means that the CUC was devalued by 8% in relation to the US dollar and other foreign currencies.

The dynamics of the Cuban economy, aggravated by the losses and damages caused by three hurricanes in 2008, and the world economic crisis made it necessary to adjust the CUC exchange rate with the dollar and other currencies so that it is more in line with Cuba’s present needs.

In practical terms, this means that the exchange rate of ALL foreign currencies has been devalued by eight percent. It is anticipated that this will stimulate export activity and the replacement of imports with domestically-produced goods.

However, the 10 percent fee for buying CUCs with U.S. dollars in cash remains in place. This fee is maintained as compensation for the costs and risks associated with handling U.S. dollars as a result of the U.S. economic, commercial and financial blockade of Cuba.

The new rates do not affect the current exchange rate of the Cuban peso with the CUC, which is established at 25 to 1 for CUC purchase and 24 to 1 for CUC sales.

To get up-to-date exchange rates for different foreign currencies in Cuba, rather than using external sites such as Xe.com, it’s better to check Cuban bank sites which are more accurate, as the information comes from within Cuba itself. The best one is: www.cubacurrency.com/banco_metropolitano_s_a.html which takes you to the English-language Banco Metropolitano S.A. Cuban Currency & Money Guide page. Click on Exchange rates and you will find exchange values that are updated every hour for the Pound Sterling, Canadian dollar, Swiss Franc, Japanese Yen, American dollar, Mexican Peso, Euro and Danish, Norwegian and Swedish Krone. The amount shown under Value is the amount of CUC which can be acquired with a unit of the foreign currency in question. Note: Average exchange values are shown, selling and buying values may vary from the average and from one day to the next.

If you are not able to access the above site, try the Banco Central de Cuba at www.bc.gov.cu/Espanol/tipo_cambio.asp Although it’s in Spanish, it’s easy to navigate. Go to the bottom of the page, under Enlaces de interés (Interest links) and click on Tipo de cambio Banco Metropolitano (Temporal) which takes you to a page that gives you the Banco Metropolitano daily exchange rates. Compra (Purchase) is the rate you’re being charged to BUY Cuban Convertible Pesos (CUC). Venta (Sell) is the rate you’re being charged to SELL Cuban Convertible Pesos (CUC).