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Thursday, May 04, 2017

Neither CUPs nor CUCs, It’s Bucks That Reign in Cuba

Neither CUPs nor CUCs, It's Bucks That Reign in Cuba

14ymedio, Zunilda Mata, Havana, 3 May 2017 — The guard looks at him and
dismisses him as an undercover cop. "Are you coming to change dollars?
I'll pay you at 90 cents," he tells the customer while turning his back
on the security camera at the Currency Exchange (Cadeca). At the window,
that same dollar is exchanged by the government for 0.87 Cuban
convertible pesos (about 87¢ US).

Possessing hard currency was heavily penalized for decades. Until its
authorization, in 1993, having foreign currency in your pocket could
lead to a sentence of up to four years in prison.

The new monetary policy drastically changed the economic reality of the
country and the bills with the faces of Lincoln, Franklin and Washington
gained prominence in everyday financial operations. The "socialist
paradise" worked with "the money of the empire," some said wryly.

A decade after that decision, the authorities decreed that commercial
transactions in the island could not be made in dollars, but only in
Cuban pesos (CUP) and convertible pesos (CUC), the latter known
popularly as chavitos.

However, "the currency of the enemy" remains an important reference
point in the informal market.

The new emerging class hordes its savings in dollars while waiting for
uncertain unification of Cuba's two currencies

Entrepreneurs, artists who sell their works in the international market
and Cubans who travel abroad are some of those who prefer the
greenbacks. The new emerging class hordes its savings in dollars while
waiting for the uncertain unification of Cuba's two currencies.

The official exchanger rate that governs the US currency is very
unfavorable. In exchange houses, every dollar is traded at 0.87 cents
CUC, a price that has not changed for years and that especially affects
those who receive financial assistance from their relatives abroad, a
not negligible figure for the national economy.

Remittances sent to Cuba reached a record $ 3,354 billion in 2015,
according to The Havana Consulting Group (THCG). The diplomatic meltdown
between the two countries and the easing introduced by the Obama
administration boosted the shipment of money and with it the upsurge of
the informal currency market.

In March 2016, days before the visit of President Barack Obama to the
island, the Cuban government announced the end of the 10% tax it had
imposed on the American currency, a decision that excited much of the
population.

However, a year has passed since that announcement, and the measure has
not been implemented. The authorities of the island justify the delay by
asserting that they cannot yet conduct foreign trade operations with US
currency as a result of the embargo.

In the banks and tourist businesses the buying and selling of Uncle
Sam's currency proliferates, parallel to the official networks. Many
state employees are the bridge between foreigners and the underground
market where the currency of the "empire" is sold.

Airports, despite strict surveillance, are the ideal site for this
trade. Tourists arrive, the lines to exchange money are long, and
individuals carrying bulging wallets wander among the travelers
whispering the service they offer.

The guards and the banks themselves are linked to the black market. They
earn a commission and keep a steady stream of dollars flowing into the
illegal networks.

The dollar is also king in the monetary operations of those who want to
get money out of the country. The currency is especially desired by
mules who travel to countries in the region, such as Panama, the United
States and Mexico, to import products such as footwear and clothing.

"This is a circular business," says Henry, an informal entrepreneur who
trades dollars. "The customer earns more than if he makes the exchange
at the Cadeca and we get quantities of foreign exchange that you cannot
go and buy from a bank," he says.

The sale of foreign currencies in the country's banking network is
authorized but it is a complicated process. "Today I only have 120
dollars in the box so I cannot sell you any more," a cashier from a
Metropolitan Bank on Ayestarán Street in Havana told a client in need of
foreign exchange.

In some bank branches they ask the customer to show an airplane ticket
that justifies their need to acquire foreign currency for a trip. "I
have walked through several banks and they tell me that they cannot sell
me dollars or euros because they do not have them," a resident of
Havana's Playa municipality complained last Friday, looking for dollars
for a trip to Cancun.

On digital classifieds sites, there are many offers for the exchange of
dollars. Most advertisers prefer amounts that exceed $1,000 and 50 or
100 dollar bills. "Selling at .96 cents a dollar," one of these
makeshift bankers says in an advertisement, promising "seriousness and
reliability."

"I have a house with five rooms and aterrace in the city of Cienfuegos,
I want 50,000, half in convertible pesos and the other half in dollars,"
says another classified in the popular portal Revolico. The practice is
becoming more and more widespread.

"I do not want my money in these little colored papers (convertible
pesos)," a musician, who performs in venues with a mostly foreign
audience such as Dos Gardenias and La Casa de la Música de Miramar,
explains to 14ymedio. Customers tip him "almost always in euros
or dollars" and what he gets in CUCs he changes for "real money."

His goal is to save enough to "spend a three-week vacation in Moscow and
bring home things and clothes for the kids." Spare parts for his
Russian-made Lada car and a one-ton capacity air conditioner complete
the dreams he wants to achieve with the green bills he keeps under his
mattress.

The musician worries that "even tomorrow they could announce the
monetary union and I would end up losing money" if it's in one of the
two national currencies. "The US Federal Reserve is there, it has
several centuries of existence and gives me more confidence than the
Central Bank of Cuba."

Source: Neither CUPs nor CUCs, It's Bucks That Reign in Cuba –
Translating Cuba -
http://translatingcuba.com/neither-cups-nor-cucs-its-bucks-that-reign-in-cuba/
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