Cuba quashes rumors currency unification around corner

For more than two decades, two currencies have circulated in Cuba: the peso in which most wages are paid and local goods priced, and the CUC used in the tourism industry, foreign trade and upscale eateries and stores carrying imported goods.

By: Reuters | Havana | Published: March 30, 2018 10:39 am

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A man holds Cuban Pesos (CUP) and Cuban Convertible Pesos (CUC) while posing for a photograph at a produce market in Havana, Cuba March 29, 2018. (Reuters/Stringer)

Cuba’s central bank on Thursday quashed rumors that it would withdraw one of the Communist-run island’s two currencies from circulation over the weekend, after nervous Cubans had rushed in recent days to exchange their CUCs for pesos. The date for the start of the much-anticipated process of so-called “monetary unification” has not yet been determined, the bank added in a statement published by state-run media. “In the last few days the number of people seeking to change CUCs into pesos at bank offices and CADECAs (exchange bureaus) has risen,” the central bank said. “This is due to the false information that in the next few days the CUC will be withdrawn from circulation.”

For more than two decades, two currencies have circulated in Cuba: the peso in which most wages are paid and local goods priced, and the CUC used in the tourism industry, foreign trade and upscale eateries and stores carrying imported goods. Neither are legal tender outside the country, which exchanges them at different rates depending on the nature of the transaction, complicating accounting, the evaluation of performance and trade for state companies.

Plans adopted by the Communist Party in 2011 under Raul Castro’s leadership to improve the performance of the ailing Soviet-style economy by introducing market mechanisms included currency unification. The peso, it said, would remain and the CUC would become history. However, it did not give a timeframe for the transition. Castro said in December last year the reform could no longer be delayed, sparking speculation it might be announced before he was due to step down as president on April 19. Castro will remain party chief until 2021.

The central bank on Thursday recalled the party’s decision at its last congress to guarantee bank deposits in accounts in foreign currencies, CUCs and pesos.

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