mellisas

Any idea what this will mean....??

Today: March 24, 2005 at 22:12:13 PST

Cuban Currency Won't Be Tied to U.S.
By VANESSA ARRINGTON
ASSOCIATED PRESS

HAVANA (AP) - In a move to further strengthen Cuba's national currency, Cuban President Fidel Castro announced that one of two types of money accepted on the island will no longer be automatically traded 1-1 to the U.S. dollar.

Beginning April 9, the exchange rate for the Cuban convertible peso will no longer be on par with the American dollar and instead will be tied to several foreign currencies, initially marking an 8 percent revaluation, Castro said in a televised speech late Thursday.

The Cuban leader said the move was necessary to create a Cuban economy no longer dependent on the U.S. dollar, which he noted is losing value against the euro and other major currencies.

Castro's announcement came a week after the communist government revalued the regular Cuban peso, a second currency used on the island, by 7 percent, marking the first change in that currency's exchange rate since it was frozen in December 2001.



http://www.lasvegassun.com/sunbin/st...032405709.html

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mike5606

Rumer has it they are going to increase the surcharge from 10 to 15 percent.

jelloduc

this means that the CUC will have a fixed rate against the Euro and other currencies but no longer against the US dollar!

jackd

The old bugger will have decreased the value of all foreign currency by 15%

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mellisas

so does that mean that everything will cost 15% more

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jackd

That is a good question, the cup went up 7% a few days back and if this cranks it another 8% against foreign currencies, our $ will be worth less

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greslogo

Radio Havana

...................

The measure comes on the heels of an increase in the strength of the Cuban
peso which now exchanges for the Cuban convertible peso at 24:1. Thus, the
Cuban peso will exchange for 8% more as of the onset of the new resolution.
The dollar will exchange for 8% less plus the current 10% fee imposed on all
dollar exchanges on the island. Thus one US dollar will exchange for 0.82
convertible pesos as of April 9th.
--------------------------

In effect he's just raised the tourist, and foreign currency prices in Cuba by 8%.

This move isn't going to fool ANYONE in Cuba and will have a significant negative effect on tourism, imho.

mellisas

negative effect on tourism .... for sure..

thinking about going to mexico right now...

it sounds like madness to me...what are they thinking...

l mean cuba is,nt cheap now...

with the increase it will be way out there

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jackd

Where is that PlayaMania site

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Sancho

Is this the one you were talking about jack? http://groups.msn.com/PlayaMania

mellisas, if you decide to take a detour to Mexico, let me know. I think you will like the Yucatan penninsula. Lots of history and natural beauty there. I love it.

jackd

Sancho, that is the site but I think it's down today, both it and CubaAmor keep giving me an error message "The connection was refused when attempting to contact www.............. I think they may be moving the sites to new software like what we have here now

It is beautifull down in that area and there's tons of stuff to do, Tulum, Excaret places where dreams are made.

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mellisas

sancho if this had happened a few weeks ago we would have been tempted to change our plans for sure...

we leave in just over 2 weeks so we will have to go with it this time.

mexico is on the cards for next year...

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amorsiempre

Re: TULUM, Mexico

On occasion an old acquaintance (ex- Canadian) comes back up to sort out some of his affairs when necessary.....he has built a house (cheaply on a bit of land he had purchased near Tulum.....and he raves about it....but so have some people who visited him and his "new-life...".

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mellisas

has this money bisso got something to do with the recent oil find in cuba..

read something about that ..but car,nt find the article now

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mellisas

this money bisso is driving me mental..

we will know the impact it will have... 2 days before we leave..

to late ...to low to jump


does this mean less drinks at the floridita

how many less l wonder

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greslogo

8% less..............

mellisas

l have heard a rumor it could be 15 less

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jackd

This was posted at TT, I left out 2 irrelevant posts

BeardoUK
Posted: 28 Mar,
7:56am

On the revaluation (in Spanish) this article from Juventud Rebelde shows how things will work in practice:

La revalorización del CUC en cifras

A partir del 9 de abril, el peso convertible se revaluará en un ocho por ciento, esto significará que un CUC valdrá un dólar y ocho centavos. Adicionalmente, al dólar se le dará ahora el tratamiento que reciben el resto de las monedas convertibles que se canjean en el país, a las que se les aplica una tasa de cambio para la venta y otra para la compra. Estas tasas se conforman aplicando un margen de entre tres y un cinco por ciento, que realmente es bajo si se considera que en Europa generalmente se utiliza alrededor del cinco por ciento más una comisión de alrededor del cinco por ciento que cobran las casas de cambio.

•Si usted va a CADECA a comprar CUC con un dólar, recibirá alrededor de 80,40 centavos de CUC, en dependencia del lugar y el día de la semana. Es decir, aproximadamente 80,40 pesos convertibles por cada cien dólares.

• Si usted quiere comprar dólares con CUC, con un peso convertible adquirirá 1,0435 dólares. Es decir, con 100 CUC podrá agenciarse 104,35 dólares.

• Si usted quiere vender un CUC en CADECA, recibirá 24 pesos cubanos.

•Si usted quiere vender un dólar en CADECA, recibirá 20 pesos cubanos, al aplicársele a la tasa de cambio del peso cubano por el peso convertible el valor del dólar con el gravamen del diez por ciento y la devaluación.

• Las cuentas bancarias en CUC mantienen todos sus atributos y operatorias: puede extraer su dinero, comprar dólares a la tasa de un CUC por 1,0435 dólares, aproximadamente.

• Las cuentas en dólares de antes del 15 de noviembre del 2004, mantienen la conversión de un dólar/un CUC, y sin gravamen. El saldo que se tenga antes del ocho de abril, cumplirá esas reglas, sin limitación de tiempo. Estas cuentas no recibirán nuevos depósitos a partir del nueve de abril, pues habría que aplicarles la nueva regla.

• Las cuentas en dólares abiertas a partir del 15 de noviembre podrán continuar depositando dólares en efectivo y sacando dólares en efectivo. Los saldos que existan el día ocho, pueden ser canjeados a CUC a la tasa de cambio de uno por uno, en este caso aplicándole el gravamen, pero no la devaluación del ocho por ciento.

• Las cuentas que se abran a partir del 9 de abril en dólares, solo podrán depositar y extraer dólares, pero tendrán que pagar el gravamen y la devaluación, si quieren comprar con sus saldos CUC.

• Las cuentas a términos (plazos fijos) en dólares, abiertas antes del 15 de noviembre del 2004, no están gravadas y mantienen lo acordado al inicio de su apertura. Tanto el principal como los intereses podrán recibirse en dólares o en pesos convertibles con la tasa de uno a uno, sin gravamen.

http://www.jrebelde.cu/2005/enero-ma...orizacion.html
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REPLY

2025
Posted: 28 Mar,10:56am
• Si usted va a CADECA a comprar CUC con un dólar, recibirá alrededor de 80,40 centavos de CUC, en dependencia del lugar y el día de la semana. Es decir, aproximadamente 80,40 pesos convertibles por cada cien dólares.

For $100 dollars you will get 80.40 CUC, that's a 19.60% difference

•Si usted quiere comprar dólares con CUC, con un peso convertible adquirirá 1,0435 dólares. Es decir, con 100 CUC podrá agenciarse 104,35 dólares.

For $100 CUC (that cost you +- $120) you will get $104.35 a 15.65% difference

Any bankers out there that want to give this a shot

-------------------------
Live Fast Die Happy

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mellisas

for goodness sake...everyday it gets worse...will be interesting to see the offical tally on april 8

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beardouk

If you are buying in CUC it is 8% more expensive.

If you are buying in CUP - 15%. (So those street pizzas have shot up !)

I don't know how the Aussie dollar has moved, but as the Euro and GBP have shot up against the dollar, Cuba is still cheaper that it was not that long ago.

mike5606

Is this just effect the dollar How is the canadian, or mexican peso or euro.. any suggestions my head is really spinning now..should I change my doolars to other currency.

jackd

Mike, all currencies will be affected.

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beardouk

Though the USD still has the 10% surcharge in addition.

jackd

How does one tie a currency to several foreign currencies, what's he gonna do a blended rate ?????????????????????????????????????

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mike5606

so it makes sense to exchange to canadian..

mike5606

It helped me a while back to do this. I will have to do it again.

beardouk

Yes jack - it's known as a basket of currencies.

Someone posted a lengthy article on how that works on Thorntree.

Quote:
siemprepatty
Posted: 25 Mar 2005
5:45pm

15. from the Business Times 2004:

.... therefore, in a world of generalised flexible exchange rates among the major currencies, pegging to a basket of currencies - as done by Singapore and India - appears to be a feasible and attractive choice. By managing exchange rate changes against a composite bundle of currencies (that is, stabilising the 'effective' exchange rate), countries may be able to buffer themselves against outside exchange rate shocks (such as G-3 currency variations) and neutralise this source of instability.

But how does one determine the optimal weights of the currency basket? There are a number of issues that need to be considered. Should one use export shares, import shares, or an average of the two? Each of these can lead to quite different weights. For instance, the US tends in general to be a major export market for many developing Asian countries but is relatively less significant as a source of imports, while the opposite is true for Japan. There are also questions about whether one should use country trade shares or the currency denomination of trade; if the latter is used, the US dollar would have a very high weight since most of the transactions in Asia are invoiced in US dollars. Others have suggested that rather than attempt careful com****tions of optimal exchange rate pegs, countries like China may want to consider an equally weighted share between the US dollar, Japanese yen and the euro (one third each). Apart from how to calculate the optimal weights for the currency basket, there remain other outstanding questions, including whether there should be a crawl, either upwards or downwards (and, if so, how rapid), and a band around the peg (and, if so, how wide).

The reasons for an upward crawl (that is, allowing the currency to strengthen over time) might be to help keep inflation in check; as a means of promoting constant restructuring to higher value-added sectors and activities; and to spur higher productivity bias in the tradeable goods sector.

Gradual downward crawl. This was the policy maintained by Singapore during its high-growth era pre-1997/98. Alternatively, countries which are faced with higher inflation than their trading partners may want to allow for a gradual downward crawl, so as to keep their real exchange rate competitive.

Apart from the crawl, there are other important issues that need to be sorted out such as whether there should be a band around the peg (possible size of the bandwidth range between plus/minus 2.5 and 10 per cent); whether the bands should be 'soft', such that the central bank may or may not intervene if the currency threatens to fall outside the pre-determined band (that is, no absolute commitment); whether the government should make explicit the values of the bands or whether this should be left more ambiguous, as in the case of Singapore. In general, more flexibility (that is, wider and relatively soft bands) is preferable to less. Irrevocably fixing a composite peg may lead to problems in just the same way as would fixing a single currency peg. More flexible exchange rates act as a safety valve by providing a less costly mechanism for relative prices to adjust in response to shocks, as opposed to the slow and often costly reductions that occur under fixed rates through deflation and productivity increases vis-a-vis trade partners.

Move towards wider pegs. Nonetheless, it could well be that a country that is initially concerned about exchange rate variability may want to start by shifting from a US dollar peg to a fairly rigid and transparent peg consisting of a composite basket of currencies. However, once the country's monetary authority becomes more comfortable with the basket regime and builds up credibility in managing the new currency arrangement and agents get used to the exchange rate variability and realise the need to buy cover against currency fluctuations, there could be a movement towards wider pegs that allow for more policy discretion a la Singapore.

The preceding suggestion of a 'band-basket-crawl' or BBC arrangement may not only be an attractive regime for US dollar 'fixers' in Asia like China, Hong Kong and Malaysia to consider, but also a country like Indonesia, which appears to have had difficulties with implementing an inflation targeting regime. While such an arrangement is no panacea against unsustainable macroeconomic policies and extreme external shocks, it may be a way of trading off the disciplinary and credibility benefits of a pegged regime with the flexibility of a floating one. A tangential positive spin-off of Asia moving towards BBC arrangements is that if there is a convergence in basket weights and bands over time among the regional economies, the region could even think about pegging to a common regional basket or create a synthetic currency (Asian Currency Unit or ACU) and use that as a reference point. This in turn may reduce concerns about competitive devaluations and be an important step towards promoting regional monetary integration. But this is something to be considered only over the longer term.

http://www.economics.adelaide.edu.au...currbasket.pdf.

jackd

Gracias Beardo, who'd a thunk

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YoungCuban

Huh? I'm soooooo lost it isnt funny!

So let me get this straight or at least try,when exchanging funds in Cuba one now has to pay a total of 18% for each dollar exchanged?

Does that apply only to US dollars or all foreign currencies?

jackd

Read posts 22 and 23 in this thread

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beardouk

It seems that each dollar will get only CUC 80.40 - see the article in Spanish.

Other currencies do not suffer the 10% surcharge.

jackd

Experts question sense of revaluing Cuban peso


The Cuban currency has gained ground against the U.S. dollar as Fidel Castro tries to bridge the gap between Cubans who earn pesos and those who get U.S. dollars from abroad.

By NANCY SAN MARTIN


Cuba's recent strengthening of its currency is designed to close the gap in the purchasing power of those who earn only pesos and those who receive U.S. dollars from abroad, analysts say.

But the peso's revaluation makes no economic sense because the communist-ruled island's economy is not strong enough to back up the 7-8 percent increase in the value of its currency, the experts added.

When coupled with a government decision in November to charge a 10 percent fee on all dollars converted into pesos, the changes amount to a 17-18 percent strengthening of a currency that is not accepted anywhere outside Cuba.

The currency shifts -- the first changes in the peso's official exchange rates since 2001 -- came in two critical decisions:

• On March 18, the value of the common peso was strengthened by 7 percent, from 27 to 25 to the dollar.

• Effective Saturday, April 9, the value of the convertible peso -- a paper chit known as a chavito and introduced in 1994 as equal to the dollar -- will strengthen in value by 8 percent.

The common Cuban peso generally is used only for state salaries and the purchase of goods deeply subsidized -- and rationed -- by the government. Dollars and convertible pesos are required to purchase non-rationed goods, such as extra food and clothing, and electronics.

Cuban leader Fidel Castro has said the convertible peso's one-to-one peg to the dollar had to be changed because the U.S. currency has been losing huge ground against other world currencies.

''Every day using the dollar gets riskier,'' Castro said. ``The dollar isn't behaving well.''

Strengthening the peso is now possible, Havana officials claim, because of an economic surge due in large part to help from Venezuela, which is providing oil at below market prices, and China, which is investing in the island's valuable nickel industry.


More at:
http://www.miami.com/mld/miamiherald...a/11312079.htm

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tomcauser

Hello folks,

I've been to Cuba previously, but this revaluation and dollar surcharge has caught me on the hop, seems the exchange situation will have changed when I return so I could do with your advice.
I've read lots of threads to get up to speed, it looks like the revaluation means all foriegn currancy is worth 8% or so less while the dollar surcharge takes an extra 10%.
But just not sure how this works in reality, We arrive in Holguin from Manchester on the 8th July and will be travelling maybe as far as Santa Clara on trains, buses, and private cars, and staying in a mixture casas and hotels.
Would love your advice on what currancy to take, best way and place to swap it, and what the bus and train can be bought in. I'm tempted to take dollars cash as opposed to euro and sterling, hard to believe the dollars status could have changed since last July, has it really???????

PS Under Jacks name it says 'Banned', is this a code for somthing or has he been banned really, and what for?

aguacate

tomcauser,

Hard to believe or not, that's the way it is.

Cheapest way is to stick to good old Manchester sterling. Even cash withdrawals on a UK debit card are now subject to two currency exchange margins - since they are billed in dollars you've got the (huge) CUC-USD margin applied by the Cuban bank, and then the (smaller bulk-rate) USD-GBP margin applied by the card issuer). At least by exchanging cash GBP you only get hit once.

Exchange is easy at any Cadeca outlet, there's also a couple of booths at the airport in the baggage reclaim area. On the street everything is either CUC or (if you're lucky) real pesos, even the black market runs on CUC.

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Rick

Tom, why only as far as Santa Clara? Why not head south and east? I've been through Santa Clara twice and don't see it as a tourist mecca. But, neither is Gitmo where I spend far too much time.

tomcauser

Well thats it then, sterling cash it is. Anyone know what rate and commission to expect at the cadeca.

greslogo