US Dollar Taking Over in Cuba as CUC Plummets

By Circles Robinson

Photo: Reuters

HAVANA TIMES – Cuban government policy these days has put the US dollar back on a pedestal while the CUC takes a dive.

Cuba has three currencies circulating, but most Cubans receive salaries in only one, the regular peso CUP. The CUC was originally introduced in 2004 and is what most tourists use on the island.

Most stores selling in CUP or CUC have empty shelves as the government prefers to stock its new dollar stores. This benefits Cubans with family abroad and the government itself, whose military has a monopoly on retail sales.

The CUC, once on the par with the US Dollar, appears on its way out and people want to convert them to dollars. According to 14ymedio, the dollar is now trading on the street for 1.50 CUC and in some cases even more.

If basic products were available in the Army’s stores selling in CUC, the currency wouldn’t be such a hot potato. But the reality is that the only stores well-stocked are those selling in US dollars on bank cards.

Economists believe that of the two Cuban currencies, the old peso, which exchanges at 25 to one CUC will survive. They also see the once despised dollar playing an ever-greater role in the government’s survival economics. 

With Cuba closed for months to tourists and Cubans living abroad, the flow of dollars into the country plummeted. With the surge of new Covid-19 cases, especially in the capital, dollars will soon be even scanter. 

Related post: What Will I Buy at Cuba’s New Dollar Stores?

27 thoughts on “US Dollar Taking Over in Cuba as CUC Plummets

  • September 2, 2020 at 7:58 pm

    Some of the Cuban islands are open for tourism. Originally some mainland airports were due to open on September 7. An outbreak of Covid in Havana stopped that. I know of a flight booking for early October, that has yet to be cancelled, so it is possible that they may open by then.

  • September 2, 2020 at 5:12 pm

    Consider the implicit tax on remittances sent by Western Union. Western Union pays out in CUC . The official government rate of conversion is 1 dollar to 1 CUC.

    The street rate for conversion of CUC to dollars is approximately .67 to 1 (or for CUC to dollars, it is 1.5 to 1). The street rate represents the real buying power of the currencies.

    So, for every $1 of remittance sent by Western Union to Cuba, the recipient only receives .67 in buying power. The difference is the implicit tax that is benefiting the Cuban government. 1/3 of the remittance.

  • September 2, 2020 at 11:48 am

    What is the latest on opening Havana for tourism? As far as I understand it is closed until the end of September? Any realistic chance they will open it up for October?

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