Printer Friendly

Castro revalues peso 7% amid rumors of currency's eventual demise.

Cuba's Central Bank has increased the value of the peso against the U.S. dollar by 7%, following Fidel Castro's announcement Mar. 17 that the peso convertible--which was previously equivalent to 27 ordinary pesos--could now be bought for 25 pesos.

The revaluation marked the first movement in the exchange rate since the Cuban peso was frozen in 2001 after tumbling by 21%.

"With this measure, we move in the strategic direction of strengthening the national currency and continue to boost the extraordinary confidence of our population," Castro told a large audience of Communist Party and other leaders during a three-hour televised speech.

"The currency of a Third World country, a blockaded country, begins its upward journey and will go, in a consistent manner, as far as it's necessary," said Castro. "The fate of the empire's currency is to devalue; the fate of the currency of Cuba, the blockaded country, the currency of the revolution, is to gain in value."

The 78-year-old dictator also used the occasion to urge an end to Cuba's black market, saying "we must do away with the scheming." He promised Cubans that the end to frequent power blackouts was at hand, vowing that "by the first quarter of next year, you can all sleep peacefully. There will be no shortage of electricity."

Castro's revaluation of the peso--which he attributed to improved trade relations with China and Venezuela, and the discovery of large oil deposits--comes four months after Cuba eliminated from circulation the U.S. dollar, which was used as legal tender for many goods and services for more than a decade.

At the moment, three currencies are still widely used throughout Cuba: the euro, the Cuban peso and the convertible peso, which is officially worth $1.00 and is known among Cubans as the chavito.

Rumor has it, however, that serious consideration is being given to the elimination of this system by way of adopting a single currency: the convertible peso. Talk on the street is that every Cuban would get paid in pesos convertibles and would have access to all kinds of products, currently restricted to "dollar areas."

But there's a catch to this in the form of another persistent rumor: a host of health and other services that are currently free would then be charged--of course at very low prices, but charged nonetheless.

Some people say that after all, many doctors are already charging for their services one way or another, under the table. Others are worried about how much their salaries would be worth, whether at the 25:1 rate or the official 1:1 rate.

At the moment, Cubans with easy access to dollars are sending those dollars out of the country--not only to open accounts and deposits abroad, but also to buy pesos convertibles in South Florida.

Banking experts have already detected considerable sums of counterfeit pesos convertibles coming from Miami in exchange for genuine dollars, which could pose a significant threat to the Central Bank.

COPYRIGHT 2005 Luxner News, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2005 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Amuchastegui, Domingo
Geographic Code:5CUBA
Date:Mar 1, 2005
Previous Article:Council's future uncertain following Kavulich resignation.
Next Article:Louisiana governor's trip nets $15m sales commitment.

Related Articles
68% of '05 budget to fund social programs.
Cuba's 'convertible peso' no longer linked to U.S. dollar.
Preparing for post-Castro.
Rodriguez: Cuba should have only one peso.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters