Saturday, January 31, 2015

Early Farewell to the CUC

Early Farewell to the CUC / 14ymedio, Miriam Celaya
Posted on January 30, 2015

14ymedio, Miriam Celaya, Havana, 29 January 2015 — It was barely 10:00
am Wednesday, January 28th, and the currency exchange (CADECA) at
Belascoaín had no national currency (CUP)*. One of the tellers explained
that he had only several 50 peso bills and that was it until the "cash
truck" arrived. Some customers, leaving because they could not transact
business, stated that this has become the norm, not only at this
currency exchange, but also at the one on Galiano Street, across from
the Plaza del Vapor.

These are virtually the only two currency exchanges operating in the
municipality of Centro Habana after most of them were converted to
ATM's, so both exchange of hard (i.e. foreign) currency to Cuban
convertible currency (CUC) as well as CUC to CUP implies traveling to
some CADECA or to Banco Metropolitano, both located at some distance,
and the likelihood of having to stand on long lines before being able to
complete the desired transaction.

Another difficulty that has become common in both CADECA and ATM
locations is the absence of bills in denominations smaller than 100 or
50 CUP, which also distresses the population, especially the elderly,
who receive their pensions in debit cards and are often unable to
withdraw all of their money, since there are no 5 or 1 peso bills
available. In these cases, they need to wait a whole trimester or
quarter until enough funds accumulate in their accounts to cover the
minimum denominations of 10 or 20 CUP, a ridiculous amount compared to
the high price of any market product, but what is significant is that
the affected individuals depend almost entirely on this income.

Since the start of 2015, Cubans who receive remittances from abroad or
convertible pesos by other means are quick to exchange their money into
the national currency. Those who receive larger amounts – on the order
of 100's of CUC, in general the owners of more thriving private business
— prefer to use the black market to exchange their funds into US
dollars. The common denominator is that nobody wants to hold CUC money,
which, until recently, was in high demand and CADECAS would even often
run out of.

Announcement of a new national currency bill being issued into
circulation in February, in 200, 500 and 1000 peso denominations,
coupled with the ability to access the former "hard currency market"
with either money, has sounded the drum-roll in people's psyche as a
prelude to the much anticipated monetary unification. People fear that
an official changeover will take place that will carry penalizing fees
that will cause serious losses to people's pockets.

The expectation is felt, by osmosis, in the capital's agricultural trade
networks, especially in meat markets that are not "state-owned", where
either one of the two currencies was accepted a few weeks ago. "Mother
of Mercy, give me national currency!" is the butcher's cry at
Combinadito de Sitios in Centro Habana when a customer brings out 20 CUC
to pay for a cut of pork meat whose price these days of non-ration cards
has risen to 45 Cuban pesos per pound. "Country farmers don't want CUC,
my brother, they have a lot of money** and are really afraid of the
monetary unification. They won't sell me meat unless I pay in national

Something similar is happening with peddlers with street carts, who
still accept payment in "convertible" currency for retail sales, but
their wholesale suppliers are demanding payment in national currency for
their products. A street peddler in my neighborhood states "farmers have
high incomes and almost all producers have accumulated large sums. None
of them wish to lose when the currency is unified".

It is evident that, once more, the lack of information and clarification
on the part of the official media are causing uncertainty and spreads
speculation throughout the population, giving way to obstacles such as
the (unexplained) shortage of cash in the CADECA, increasing the demand
for US dollars in the black market foreign exchanges.

With the imminent introduction of the new denomination bills, clear
evidence of the very high inflation rate in Cuba, nothing is known about
a monetary unification that -according to official notification- will be
gradual and will "not affect" Cuban pockets. For now, it is expected
that, when it takes place, the official exchange rate of 25 pesos in
national currency for each CUC will not continue, a transaction with
which the CADECA and the state commercial networks have operated to
date. Our experience, after decades of deceptive monetary maneuvers, has
motivated the popular wisdom so that, already, before the dreamed about
monetary unification, Cubans are shedding was has been the last few
years' supreme sign of Cuba's status: the CUC.

Translator's notes:

*See here for a longer discussion of the history of Cuba's currencies
and the plan to move to a single currency. Briefly, Cuba has two
currencies: Cuban pesos, also called moneda nacional (national money),
abbreviated CUP; and Cuban convertible pesos, abbreviated CUC. In theory
CUCs are a hard currency, but in fact, it is illegal to take them out of
Cuba and they are not exchangeable in other countries. Cubans receive
their wages and pensions primarily in CUPs, with wages roughly the
equivalent of about $20 US per month, and pensions considerably less.
The CUC is pegged 1-to-1 to the American dollar, but exchange fees make
it more expensive. The CUP trades to the CUC at about 24-to-1.

**It has been a common practice in other tightly controlled countries,
when new currencies are introduced, to limit the total amount of money
people are allowed to exchange and/or to require documentation of the
sources of larger sums. As the old currency becomes instantly worthless
domestically and internationally, people who have been 'hoarding' it can
see almost all their savings disappear. Cubans fear this could happen
with the elimination of the CUC.

Translated by Norma Whiting

Source: Early Farewell to the CUC / 14ymedio, Miriam Celaya |
Translating Cuba -

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