CUBA NEWS
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Dollar replaced by 'monopoly money'
in Cuba
HAVANA, 8 (AFP) - The US dollar disappeared
from stores, hotels and restaurants in Cuba
in what communist leader Fidel Castro has
called a move to counter US attempts to
stifle the island's economy.
Cuban businesses can now only accept the
"convertible peso" which has a
face value equal to one dollar but which
is worthless outside the country.
The coloured notes have become known as
"chavitos", or "monopoly
money", by the local population. But
most people have accepted the change ordered
by Castro.
"People have been well informed and,
up to now, we have not had any problems.
Everyone comes to pay with 'chavitos',"
said Mileidis Suarez, a checkout cashier
in a supermarket in the centre of Havana.
Castro, shortly after breaking his arm
and leg in a fall, appeared on television
on October 25 to order the end of dollar
transactions, which have been allowed since
1993 under an earlier initiative to boost
the economy.
His move came as a new jolt to the population
which has seen conditions steadily deteriorate
in recent years because of the US embargo
and the loss of European communist allies
in the 1990s.
The authorities originally gave the population
two weeks to change dollars for convertible
pesos, but this deadline has now been extended
until November 14. After that date a 10
percent surcharge will be added to currency
swaps.
Cubans can still keep dollars at home and
hold dollar bank accounts.
But many have been queuing at hundreds
of special exchange counters to swap dollars
for the convertible peso. There has also
been a surge in the opening of dollar accounts
in banks.
Until Castro made his decree last month,
Cubans had hoarded dollars to be able to
buy products -- including some essentials
-- in dollar stores.
Castro said that withdrawing the dollar
from circulation was a response to "mafia-like"
US policies against Cuba.
Experts in the United States the move is
likely bring hundreds of millions of dollars
into government coffers in the short term
but that Castro's order has been mainly
political.
Cuba has little access to international
monetary institutions and has to borrow
on short term markets. It is struggling
to pay off foreign debts of about 11 billion
dollars.
Castro legalised the dollar in Cuba in
1993 in a bid to boost the economy after
the collapse of the communist bloc. A US
trade and political embargo has been in
place for 42 years.
In recent years the economy has become
increasingly dependent on tourist dollars,
which bring in about two billion dollars
a year and remittances from expatriate Cubans
who send an estimated 800 million dollars
a year.
Now there will be the local peso and the
convertible version.
Rene Lazo, deputy chairman of the Cuban
central bank, said the use of the dollar
prohibited attempts to estimate the amount
of money in circulation, the Trabajadores
newspaper reported Monday.
He said that now the central bank will
be able to "maintain an adequate balance
between monetary circulation and the offer
of goods and services."
The official press has called the currency
change "a new victory over imperialism"
saying that Cuba was regaining its "monetary
sovereignty".
Cuba to experiment with trading in yen,
European and Latin American currencies
HAVANA, 9 (AFP) - Cuba will open a currency
exchange window to trade Japanese yen, Canadian,
European and Latin American currencies for
the convertible peso, the local currency
the government is using to replace the US
dollar, the communist party daily Granma
announced Tuesday.
The special exchange office will open next
week in Havana, the report said.
The convertible peso, which has no value
on international markets, on Monday became
the only currency accepted for transactions
in communist-ruled Cuba, after more than
a decade in which the US currency was used
in transactions involving imported goods.
"In response to the Empire's aggressions,
Cuba recovers monetary sovereignty,"
read a Granma headline refering to the United
States.
Expatriate Cubans send more than 800 million
dollars a year to relatives on the island.
But the government, on the heels of tightened
US sanctions, is set to charge from next
Monday a 10-percent tax on money sent into
Cuba in US dollars.
So most Cubans have traded in greenbacks
for convertible pesos, and many have opened
US-dollar denominated savings accounts;
if they receive transfers from abroad into
these accounts they will not be charged
the 10-percent tax.
Cubans can still keep a limited amount
of dollars at home, as well as hold US dollar
bank accounts.
Cuban Businesses No Longer Accept Dollars
By Vanessa Arrington, Associated
Press Writer. Mon Nov 8.
HAVANA - After a decade as the dominant
currency to buy everything from shampoo
to canned food to furniture, the U.S. dollar
was eliminated from circulation Monday in
Cuba.
Cubans as well as tourists visiting the
island must now use a local currency tied
to the dollar. Cuba's communist government
announced the change Oct. 25, prompting
thousands of Cubans to flood banks and exchange
houses to turn in their dollars for Cuban
convertible pesos.
A 10 percent surcharge to convert the U.S.
currency into pesos was to have taken effect
Monday, but because of the huge demand to
dispose of the U.S. bills, the Central Bank
extended the surcharge-free period to next
Sunday.
The surcharge will not apply to other foreign
currencies, such as the euro or the Canadian
dollar, and there will be no surcharge to
buy U.S. dollars.
Cubans and tourists in Old Havana lined
up outside exchange houses and banks Monday
to convert their dollars.
People in one queue were entertained by
a dachshund named Pillo Chocolate who barked
at currencies other than the convertible
peso. After sniffing a peso, the dog swiped
the bill with its paw in approval.
"Before, Pillo would reject any currency
that wasn't the dollar," said Roberto
Gonzalez, the dog's trainer. "But in
the last week I trained it to accept the
convertible peso. It knows it has to adapt,
too."
Cubans appeared to be accepting the government
measure with little complaint.
"For me it's the same whether I use
the dollar or the convertible peso,"
said Javier Fernandez, 50, a self-employed
handyman. "All I need is the currency
that will allow me to eat."
Cubans will now use the convertible peso
to purchase goods they have been buying
with dollars since the U.S. currency was
made legal tender in 1993 to help attract
hard currency to Cuba after the island lost
Soviet aid and trade.
Previously sold at "dollar-only stores,"
such items include groceries such as cereal,
yogurt and bottled water, as well as most
toiletries. Washing machines, furniture
and gasoline have also been sold in dollars.
The Cuban convertible peso, like that of
many other smaller nations, has no value
outside the country. There also exists another
currency on the island - the regular Cuban
peso - but it has little value inside the
country and is used mainly to buy fruit
and vegetables as well as gain admission
to concerts, museums and movie theaters.
In announcing the currency switch, President
Fidel Castro (news - web sites) said widespread
use of the money of his country's No. 1
enemy - the United States - was being halted
to guarantee Cuba's economic independence.
Castro said the move was necessary to protect
the island nation from an increasing U.S.
crackdown on the flow of American currency
into Cuba.
The United States has recently implemented
severe limits on the amount of cash that
Cuban exiles can send to relatives on the
island and Federal Reserve (news - web sites)
fines imposed on international banks sending
U.S. dollars here.
Cubans can still hold the American currency.
Some independent analysts believe many with
savings will continue hoarding some dollars
at home.
"Nobody really knows how much U.S.
money Cubans have, but it is substantial,"
said Paolo Spadoni, a Cuba expert from the
University of Florida in Gainesville.
A report by Spadoni last year estimated
at least $500 million was being stored in
the homes of Cubans, most of it money received
from relatives in the United States.
Central Bank President Francisco Soberon
told The Associated Press last week authorities
were surprised to see how many dollars Cubans
have been "saving under their mattresses."
Soberon, however, declined to provide figures
on how many dollars had been exchanged or
deposited since the currency switch was
announced.
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