Money Is Better in Dollars
Cuba: Money Is Better in Dollars / Ivan Garcia
Posted on April 24, 2015
Ivan Garcia, 6 April 2015 — Without being an expert in economic matters
or the Wall Street currency market, Erasmo likes to trust his instincts.
For fourteen years he has been engaged in buying and selling dollars and
Also convertible pesos. In the doorway of his house, within walking
distance of a state-run currency exchange (CADECA), he offers his
services in a lowered voice to the people standing in line to buy or
“Privately buying or selling currency is illegal in Cuba. The police
have already sent me a warning letter and I have paid two fines of 1,200
Cuban pesos (about 50 dollars) for transacting currency exchanges.”
His modus operandi is simple. Like the state, he buys the CUC for 24
pesos and resells it for 25. But for international currencies, such as
the dollar or the euro, he pays a better price than the state banks.
“I’m starting to see Cuban residents of the U.S. who are visiting the
island, wanting to exchange five or six thousand dollars. The state
pays 0.87 CUC for every dollar. I offer 0.94 CUC for bills up to
twenty dollars. On large bills of 50 and 100 dollars I pay 0.95. And I
have clients who I will buy from at one-for-one,” said Erasmo.
The olive-green regime has mounted exchange operations remote from the
framework of world prices. Cuba, despite its third-world economy and
infrastructure, by official decree pegs its currency to the U.S. dollar
by its own free will.
When Fidel Castro came to power in 1959, the Cuban peso was valued on
par with the dollar. But economic planning and nationalization of
businesses dramatically reduced the production of goods and wealth.
The State used artificial exchange rates and prohibited the possession
of hard currency. Cuban law carried punishments of up to five years’
imprisonment for persons possessing foreign currency or engaging in
In street slang, “jinetear” [jockeying]—a word that used to be used
for prostitution—was applied to people prowling hotels and resorts to
buy dollars, paying a better price than that offered at the official
“During the mid-80s, I went every day to La Rampa, in Vedado, to
“jockey” greenbacks. The government bought dollars one-for-one. We
jineteros paid four or five pesos. We invested the profits in buying
clothes and food from foreign students or residents who bought them at
stores selling for U.S. dollars, to which we Cubans were prohibited
access,” says Juan Carlos, who has been conducting clandestine foreign
exchange for more than thirty years.
In 1993, with the legalization of the U.S. dollar, hyperinflation soared
in the country. After the fall of the Berlin Wall and the demise of the
USSR, Cuba plunged into an era of poverty.
Oxen replaced tractors, and one hot meal a day was a family event. Food
prices soared and the dollar reached a value of 150 Cuban pesos.
By the late 90s, the storm subsided and the US dollar stabilized at 24
pesos. Throughout the island hundreds of CADECAS opened, allowing people
to buy or sell dollars.
In 2005, following a banking scandal in the Swiss bank UBS, which was
fined one hundred million dollars by OFAC, in order to replace old
dollars in a five-billion-dollar account in the name of the Cuban
regime, Fidel Castro decreed a tax of 20% on the currency of the United
States, his archenemy.
Illegal moneychangers like Erasmo began to sell the dollar at a better
price. “The thousands of Cuban doctors and professionals working in
Ecuador, Venezuela, and South Africa bought them one by one. They
invested those dollars to buy duty-free goods, mobile phones, or plasma
televisions which they then resold at three times their purchase price.”
In 2011, General Raúl Castro fixed the exchange rate for the dollar at
87 cents. “On the black market we’re always two or three steps ahead
when it comes to the monetary policies of the government. It’s simple:
we’re on the street and are guided by supply and demand. The state only
knows how to govern with monopolies and decrees, not with the market,”
That diluted exchange rate hurt more than 700,000 Cubans living in the
U.S. who visited their homeland in 2014. “They’ve built a casino.
Between one thing and another, I spent nearly seven thousand dollars.
Their assessment siphoned off $910. They’re bandits,” says Santiago, a
Havanan who lives in New York.
Augusto, an economist, suggests to people that they save whatever
foreign exchange they get in dollars. “It is advisable, especially right
now with the fall of the euro and the resurgence of the dollar.
According to my calculations, when the currency in Cuba is unified, the
dollar will shoot up. It won’t reach 120 pesos as in the 90s, but it
will trade at three times what the banks pay, because inflation can
become dangerous in the future, for the lack of takeoff in production of
goods and food. If the government wants to increase tourism from the
U.S. it should eliminate the arbitrary 13% tax.”
Since the summer of 2013, the military autocracy has declared its
intention to unify the currency. Periodic rumors cause
Cubans-without-milk-for-coffee to cover their backs for a possible
devaluation of the convertible peso, changing their savings into dollars.
The Castro regime has ensured that, for the moment, the savings of
citizens will not be affected. But the instinct of guys like Erasmo says
that the money saved under the mattress is best held in dollars. Just in
Source: Cuba: Money Is Better in Dollars / Ivan Garcia | Translating