Cuba after decades of using an old dual currency system has decided to shift to a single unified exchange rate of 24 pesos (Cuban currency) per dollar from January 2021 as stated by the Miguel administration. This change aims to streamline the currency system and work as an effort to update the economic and social model of Cuba.
Cuba, being a socialist economy saw a slump in their tourism industry ever since the onset of coronavirus as they were already suffering due to the US embargo. Thus, the government aims to reach a modification of salaries, prices, and subsidies as part of a wider reform package resulting from the new currency system.
The foreigners in Cuba usually transacted Convertible Cuban Peso while the locals used the weaker Cuban peso. The new system will take effect from January 1st and will be finally removed from circulation by June 2021 This new system was long overdue for the betterment of Cuba as it had been a while since they were suffering due to its painful reform and a damaged system. This would potentially open the door to a fluctuating exchange rate. However, the government has taken full control in determining the value of the peso and publishing the exchange rate daily on its website under the Central Bank of Cuba.
