US Dollar Taking Over in Cuba as CUC Plummets
By Circles Robinson
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?
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.
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.
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?
I’m Canadian and stayed in Casas. It is a pretty hard work to stay in one. You are exposed to all kinds of tricks that tourists face. A lot of the time the negatives of staying in a Casa outweigh the positives. I could go on and on about what a tourist faces while staying in a Casa but to illustrate it in short; a tourist in a Casa is watched by the owners as close as the Cuban Government watches its opposition. You can’t fart without someone knowing that you did.
The only negative thing I have ever heard Cuban’s say about Canadians: “Canadians only stay at the resorts. They don’t stay in Casas. Canadian’s tourist money goes to the big guys, not us little ones.”
Miami Cubans are not of one accord other than detestation of the Castros. Their opinions and political loyalties vary.
Many Canadians have a smug view that because they are the largest single proportion of tourists to Cuba, that they are entitled to especial consideration. To the Castro regime, they are but a source of revenue.
Another odd thing is that religious groups in Canada – and some in the US, visit Cuba as if on missions to convert. Frequently in their innocence, they think that Cubans appreciate such visits – and they often do, if it aids financially. There is however, no hostility towards Canadians.
As one with fairly prolonged experience of living in Cuba with my Cuban family, I consider that the 7% membership of the Communist Party of Cuba is a fair representation of level of support, although some would argue that they join for the undoubted benefits of being seen to be ‘loyal’ to the regime.
Among the younger generations especially university graduates, political scepticism is widespread, with much discussion, and more questions than answers. They pursue social networks avidly. Contact with former colleagues and family members who have emigrated (fled) to other countries, increases the demand for further information about alternative political systems.
Some Cubans choose to describe themselves as “socialist” very few as “communist”.
A very large percentage are politically numbed by the non-ending propaganda notices, pictures, posters, slogans and hoardings that surround them, along with radio and TV exhorting support for the “revolution”. Their concentration is however upon daily survival, not political involvement, as they feel powerless to hope for any change.
Your question Mrs. Canadian, begs another more significant one!
What choice do Cubans have in who they support?
“Who do the Cuban people support”
Depends on who you talk to.
Clearly the communist system doesn’t work.
If they actually had a free and fair election with opposition parties that have access to the media the communists would get crushed.
That’s why they don’t have them.
Reading the article and comments below is very confusing … Are the Miami Cubans pro Cuba or are they Trump supporters? Then; do Cubans consider Canadians to be hostile?
As I understand the Canadians are the #1 visitors to Cuba and spending all kinds of money. Then we have Trump raging with aggression and punishing Cuba with the strictest sanctions yet. What is confusing who do the Cuban people support?
Western Union is only available in the US for Cuba transits.
Canadians can not use it anymore. Not sure how you would send US dollars.
There appears to be a lot of unnecessary confusion regarding the Canadian dollar. When the Liberal Party under the leadership of Justin Trudeau took office, replacing the Conservative government of Stephen Harper, the Canadian dollar traded at just under 80 cents to the US dollar. It then declined to 75 cents, going as low as 71 cents and has remained between those two rates.
Cuba does not have a currency recognized on international markets. The Cuban government when introducing the Cuban convertible (CUC), set it at 1 CUC = 1 US dollar, and the Cuban peso at 25 pesos = 1 CUC.
In consequence, the exchange rate given by the Cuban banks and Cadecas, for Canadian dollars, is linked to the international rates of the Canadian dollar to the US dollar. As is international practice, there is a percentage fee for making all exchanges. So if for example the Canadian dollar is trading at 75 cents to the US dollar, the Cadeca will value the Canadian dollar at 72 cents. So if you exchange $100 Canadian, you will receive 72 CUC.
Outside Cuba, both the CUC and peso are worthless. In consequence when leaving Cuba and exchanging CUC for Canadian dollars, you will receive the equivalent of 69 cents per CUC.
The figures i have used are approximations.
The Castro regime thirst for hard currency is because they have to pay for imports in hard currency. As an example, at the airport departure lounge, any food or drink purchases had to be made in hard currency, with change given in US dollars. Then if purchasing another drink and paying in those US dollars, an additional 10% was deducted. Robbery? Let’s just say low cunning.
Western Union charges are much higher than bank charges. The Cuban regime gets a cut by having WU offices in Pan-Americana shops. Canadian banks usually charge a flat fee for transferring money into a Cuban bank account. That is usually $35 whether the sum is $1,000 or $10,000.
There is a black market within Cuba for hard currency as Cubans want to acquire it for shopping at the new hard currency stores or to assist in fleeing.
I sent my sister $50 she got 46 and change. Very easy to send. Western Union.
Miami has a different deal though.
I sent my sister money through Western Union and last month what are you people talking about?
and the gentleman that told the vendor how they should do business in Cuba, I think you have a lot of nerve. I resent as a Cuban foreigners telling us how we should live our lives.
170CAD sent and comes out 88USD on the Cuban card? WOW! That’s robbery!!
What Cuban militia?
How can I help my cousins in Camaquey, Holguin, & Havana? What is the best route to help? cash app, western union, or what else is available? Thanks .
Antoinette Rockwood Tisdale
mrst988 @ aol.com
Sorry, anybody has seen any store with a banner from a cuban militia?
And i cannot transfer directly to a cubans bank account american dollars..the canadian bank tells me i must do wire transfer of canadian money to the numbered account instead of wiring usa funds from my account to theirs..this is so everyone gets fees and exchange rates etc i presume..so including the 30 dollars canadian wire fee i spent 170 canadian to put 88 on the cuban card or account…wow..sending cucs thru transfer companies was cheaper for me but now pretty much useless to them..and no more western union..yuk
With the current street exchanges as high as 1.95/1.00 in Havana, there sure is a big demand and a poor supply of USD in Cuba.
Smart Cubans are buying Cdn for 0.95CUC to deposit in their MLC accounts. That’s closer to 150% of the rate given by banks.
The CUC is a worthless piece of paper, like a casino chip from a casino that went bankrupt years ago. So yes, getting $0.65 CAD for every 1 CUC is grand theft.
Do you really believe that US or Canadian dollar should be traded at par with Cuban currency? You must be extremely confused indeed.
How is it that the cuc is 1 to 1 with the US dollar? How does the government arrive at that value for the cuc? I too am Canadian and am bewildered at how my dollar is worth so much less
I found it hilarious and telling that during my last recent visit to the island, I saw at the dictatorship’s official point-of-exchange kiosks known as CADECA (CAsa DE CAmbio), the official currency exchange rates written on a chalkboard in chalk.
Mrs Canadian I’m also a canadian and I’m not quite sure what you’re upset about? Our money is worth less than the US dollar. Cuc and $1 US is worth the same. So you are complaining that our money is worth less the US? Our money does not trade off equal value in other countries. So I’m extremely confused by your complaint.
It takes $1.31 Canadian to buy one American dollar (exchange rate August 31/’20).
It takes $1.50 CUC to purchase one American dollar according to the article.
It takes 25 Cuban pesos to purchase one CUC according to the article. CUC’s are slowly on their way out ditto from the article.
Any Canadian tourists, potential business investor, and all resident Cubans must know these essential facts on a daily basis certainly if one is a resident Cuban and for those planning on visiting.
Certainly for Canadian tourists who choose not to reside in a closed economic system such as an all inclusive resort hotel, venturing out and trying to enjoy everything Cuba has to offer can be a monetary challenge to the venturesome, to say the least.
Upon arrival at the airport, the tourist, not going directly to a booked hotel, needs to exchange Canadian dollars for either American dollars or CUCs if they have not all ready done so at home.
They scurry around the airport asking anyone with hopefully some knowledge of current Cuban monetary policy whether taxis accept American dollars or do they only accept CUCs. That needs to be cleared up quickly if the passenger hopes to leave the airport in an efficient and timely manner.
Once comfortable with the decision the tourist with either American dollars or CUCs in pocket begins exploring Cuba. But s/he needs to eat. There is a fruit vendor just down the street selling fresh, wholesome fruits which the tourists would like to try.
Give me two bananas and that ripe mango. For you, the friendly vendor says in his best English, only 10 pesos. What? Pardon me says the tourists with a blank stare; I only have CUCs (in large denominations) and American dollars.
Not being a scrupulous vendor, the situation is amicably addressed with the tourist handing over his smallest CUC denomination – 5 CUC bill – . The Cuban vendor overjoyed in having received 125 Cuban pesos for fruit worth a fraction of what he received (25 x 5 = 125 CUP pesos).
Multiply that scenario over and over everywhere on the island and there is mass confusion regarding any monetary transaction no matter how honest and forth write the transaction is between any vendor and any customer.
There just is too many monetary vehicles for any reasonable person to deal with. This is not common in any other tourist destination where the host country counts on annual visitors to flock and enjoy their experience.
This monetary situation currently in Cuba is another impediment to its massive potential economic well being. Please, says the customer to the Cuban vendor, have only one acceptable currency on the island so that Cubans, tourists, business visitors all have one common denominator to work with from the get go.
The vendor shrugs his shoulders, points in the direction of Havana with his lips sealed and his hand stroking his imaginary beard! There is the problem.
Mrs. Canadian: very simple. The CUC is fixed at a value of 1:1 to the US dollar. Therefore the Canadian dollar exchange rate to CUC is the same as it is to the US dollar, less a 3% exchange fee.
Keep hold of your Canadian dollars – the CUC is on its way out!
Laughing a little at this craziness. Apologies! Please do tell me; is the Canadian dollar still traded at 60-65% of the CUC? I’m a Canadian tourist who willingly accepts the ridiculous exchange rate between the CUC and CAD – take all I got I scream when I arrive in Cuba! Anyhow; how is the Canadian dollar fairing up to the Mighty CUC at the moment??? LOL!