Cuba Devalues Peso, Pegs it to U.S. Dollar

David Savona
Posted: March 15, 2011

Cuba cut the value of the Cuban Convertible Peso by 8 percent yesterday, returning it to equal value with the U.S. dollar. The change, effective immediately, is meant to boost the Cuban economy, which depends heavily on income from tourists.

Cuban Convertible Pesos, also known as CUCs, are used solely in Cuba. They aren't traded freely on international markets, as are dollars, euros or yen, and their value is controlled by the Cuban government. It is the only currency that tourists can use in Cuba. (Cuban locals use a different currency, national Cuban pesos, or CUDs, which are worth about 25 times less than a CUC.)

Long pegged to the value of the U.S. dollar, in 2005 the Cuban government changed CUCs, putting them at 1.1 to the dollar. There is also a 10 percent fee people must pay when changing U.S. dollars into CUCs. The exchange fee remains after this devaluation.

The Central Bank of Cuba noted that the decision to return to parity with the dollar was based upon the woes of the Cuban economy, which has been "aggravated by the damage and losses provoked by the hurricanes of 2008, as well as the effects of the international economic crisis, characterized by much volatility on the monetary markets," said Ernesto Medina Villaveirán, minister-president of the Central Bank of Cuba, according to Granma, the official newspaper of Cuba's communist party.

Tourists were once able to spend U.S. dollars in Cuba, paying for cigars, meals in restaurants, cab fares and even hotel rooms with greenbacks. (Credit cards backed by U.S. banks cannot be used in Cuba.) Beginning in November 2004, Cuba no longer allowed dollars to be used for payment, moving exclusively to the CUC, which had been created ten years earlier.

CUCs come in many forms, including bills worth 1, 3, 5, 10, 20, 50 or 100 CUCs, as well as 1 and 2 CUC coins.

Travel to Cuba is far from cheap. A hotel room at one of Havana's premier hotels, such as the Melia Cohiba, is more than 100 CUCs per night. Lunch for two with beverages can be around 80 to 100 CUCs in a fine paladar, a half hour of computer use in the business center of a hotel runs about 10 CUCs, and all visitors must pay an exit tax of 25 CUCs.

The one thing in Cuba that is relatively inexpensive is a fine cigar. A diminutive Montecristo No. 5 costs about 3.60 CUCs, a Churchill-sized Cohiba Esplendido runs around 18 CUCs, and a Montecristo No. 2 pyramid is some 9.60 CUCs, or 240 CUCs for a box of 25.

Paul Byrne Toronto, Ontario, Canada, March 16, 2011 7:01pm ET
Good news for us Canadians (or lucky US journalists...David). Some recent Cuban cigar prices from November 2010: Romeo y Julieta Churchill 8.70 CUC, Monte Cristo # 2 7.60 CUC, Cohiba Siglo IV 9.75 CUC, and Cohiba Robusto 10.40 CUC. A steal compared to anywhere else in the world outside of Cuba. March 20, 2011 10:44pm ET
I just returned from Cuba and found that most prices in the Habanos Cigar shops were about three times cheaper than here. A box of Monte Cristo no.4 was 107.00 CUC, Punch coronation, H. Upmann Tubos and Partagas Coronas Senior are all in the 3.00-4.00 CUC range. Great prices considering our dollar is on par now.
John McAuliff March 22, 2011 7:37am ET
The 10% exchange fee could also be eliminated. It was imposed in response to aggressive actions by the US to bar Cuba's international exchange of the dollar, including a $100 million dollar fine against a Swiss bank.

If President Obama also ended this absurd Bush policy, the Cubans can be expected to remove the exchange fee.

Note that we have summarized the new openings for authorized travel at

John McAuliff
Fund for Reconciliation and Development
nader niromand blackburn, GB:826, April 28, 2011 6:30pm ET
hi can u helpe me if i whant a bay what i must do thanks
Kabral Brathwaite Atlanta, GA, USA, July 12, 2011 9:17pm ET
A very good friend of mines is travelling to Cuba soon on Business. He is a non-cigar smoking. I smoke cigars i prefer Mild to Medium Maduro wraps. What types/ brands should i have him purchase for me?

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