Cuba Devalues Convertible Peso

Cuba’s Central Bank has decided to devalue the Cuban hard-currency convertible peso (CUC) by 8 percent in relation to the US dollar and all the other foreign currencies.

In a press release published on Monday by Cuban media outlets, the Central Bank announced that it decided to re-establish the parity between the CUC and the US dollar, which was altered in 2005. The release points out that that the dynamics of the national economy during the subsequent years, aggravated by the losses and damages caused by three hurricanes in 2008, and the effects of the current international economic crisis, led the Cuban Central Bank to question the convenience of maintaining an exchange rate that is not in line with the country’s current economic needs.

The communiqué explained that, however, a 10 percent tax will remain in place for those who buy CUCs with US cash dollars, as compensation for the costs and risks that it entails for Cuba the use of the latter due to Washington’s almost 50-year-old economic, financial and commercial blockade of the Caribbean nation. The note adds that each hard-currency peso is still worth 24 of the standard pesos and that the new measure does not affect the official exchange rate between the Cuban peso and the CUC used in the domestic state sector, which establishes parity between them.

The Central Bank said the move should stimulate exports and the substitution of imports.

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