Cuba devalues convertible peso, at dollar parity

[El Presidente]

Cuba devalues convertible peso, at dollar parity

(AFP)

HAVANA — Cuba devalued its convertible peso by eight percent Monday to the level of parity with the US dollar as part of efforts to boost the communist-ruled island's flagging economy, the central bank said.Use of the convertible peso is limited to tourists and other foreigners, for Cubans who receive remittances from abroad and for export activity.

It was established in 1994 at parity with the dollar and in 2005 was revalued to a level of 1.08 US dollars.

The latest action brings the convertible peso -- a currency to which only a small number of Cubans have access -- to parity with the US greenback.

Authorities will maintain a 10 percent tax on exchanges with the US dollar "as compensation for costs" and for the "irrational and unjust" embargo imposed on Cuba by the United States, according to a central bank statement published in the Communist Party newspaper Granma.

The revaluation is a step "aimed at promoting an improvement in the balance of payments because it is a stimulus to export activity and promotes import substitution," said central bank president Ernesto Medina.

Under the two-currency system in place, most Cubans use the standard peso which trades at roughly 25 to the US dollar.

The devaluation could help boost tourism, by lowering costs for foreign visitors. It likewise may also encourage more private investment in Cuba, and boost the spending power or Cubans who receive remittances from abroad, amounting to between $600 million and $1 billion annually.

But it will also make foreign goods priced in dollars or other hard currencies more expensive for most Cubans. This, according to officials will encourage more local production, especially in the food sector.

The move comes with Cuba embarking on a series of economic reforms aimed at opening up the country to more foreign investment and boosting private sector activity that had been strictly limited under communist rule.

A Communist Party congress in April is expected to endorse the wide-ranging reform plan proposed by President Raul Castro.

The reforms seek to have former state workers absorbed by the private sector, for state subsidies to be cut, for urban cooperatives to spring up, the welcoming of foreign capital, and for companies to operate autonomously

[Ryan]

Great timing. The difference would have bought me a jar of P1s.

Good for you though Prez, when are you off?

[El Presidente]

Great timing. The difference would have bought me a jar of P1s.

Good for you though Prez, when are you off?

Few months away yet mate

[mazolaman]

Interesting reading,thanks.

They're certainly trying all sorts of things to get things moving..

[El Presidente]

Interesting reading,thanks.

They're certainly trying all sorts of things to get things moving..

They need to devalue it another 20% to make Cuba competitive in the region. It is a start however.

[Ryan]

Few months away yet mate

I'm sure you'll have a great time, wish I was going again but a few months more for me.

[warren516]

They need to do what ever they can to get the embargo lifted by the United States.