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Cuba overhauls its currency

Regional 04 Jan, 2021 Follow News

Cuba is reforming its confusing currency

The Cuban government overhauled its currency on New Year’s Day to try to improve its economic performance amid the pandemic and the tightening of US sanctions against the island. This will be a relief for Cayman Islands residents who regularly visit the island and are confused by the varying exchange rates.

The reform eliminates the dual currency system in place on the island since 1994, and increases salaries, pensions and social security payments while transforming the pricing structure completely.

Cuba's planned economy has been operating with the Cuban peso (CUP) and the Convertible peso (CUC), pegged to the US dollar at par and worth 24 times as much as the CUP.

However, the CUC has had different exchange rates for the public, joint ventures and state-owned enterprises over the past three decades, which has created distortions in the economic system, say the island's authorities.

With the new measures in place, one dollar will equal 24 CUP, and the CUC will be out of circulation by the end of June.

Cubans generally believe that this is a wise decision by the government.

Havana resident Sonia Cruz said: "As a state employee, I was paid in CUP but needed to convert most of my salary into CUC to buy hygiene products and food. That made things more complicated.”

Nationwide, automatic teller machines are no longer dispensing CUC notes as grocery stores, shopping centres and state-operated businesses are giving change only in Cuban pesos.

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