Cuba to stop accepting US dollars. Bring Euros!

From Reuters

Thursday October 28, 2004

HAVANA, Cuba (Reuters) -- Tourists planning vacations to Cuba are advised to take euros or other currencies rather than U.S. dollars, which will be pulled from circulation on Nov. 8, said the government.

Shops, restaurants and other businesses will only accept Cuban pesos in all cash transactions as of then and dollars will have to be exchanged into pesos with a 10 percent penalty not applied to other currencies.

"It is advisable that visitors to the country do not carry U.S. dollars and instead bring euros, Canadian dollars, pounds sterling or Swiss francs, which will be more practical and cheaper," Tourism Minister Manuel Marrero said.

Eleven years after legalizing use of the U.S. dollar in the depth of Cuba's a post-Soviet economic crisis, President Fidel Castro announced on Monday the greenback will no longer be accepted in cash transactions.

The decision was prompted by Bush administration measures to squeeze Castro's communist government financially with new restrictions on travel and cash flows to Cuba.

The dollar is the dominant currency for consumer shopping in Cuba, but the government was having problems renewing U.S. notes in circulation since the Federal Reserve fined the largest Swiss bank, UBS, in May for shipping fresh dollars to Havana.

Marrero said the move away from the dollar will not affect tourism in Cuba, the cash-strapped country's largest source of hard currency.

Three quarters of the 1.9 million tourists that visited last year come from countries whose currencies are freely exchanged in Cuba: 28 percent from Canada, 40 percent from the euro zone and seven percent from Great Britain, he said.

European tourists do not have to change their euros in Cuba's top six beach resorts, where the European currency is accepted as legal tender.

Cuban authorities plan to extend use of the euro to more tourist centers, Marrero said.

Credit card purchases in dollars will not be subject to the 10 percent charge, though cards issued by U.S.-based banks are not accepted in Cuba due the four-decade-old trade embargo.

Marrero said the international banking community had seen Cuba's move away from the dollar as "absolutely normal" and had fully understood its advantages for Cuba.

Growth of Cuba's $2 billion per year tourism industry slowed to 9.5 percent at the end of September from 12 percent for the first half of the year due to the low summer period and an active hurricane season in the Caribbean.

Cuba expects to top 2 million arrivals this year for the first time, despite soaring oil prices that will push up travel costs, Marrero said.

But the number of Americans visiting Cuba will drop by 30 percent this year as a result of the Bush administration's stepped up restrictions on travel to the island, mainly by Cubans living in the United States who can only visit once every three years now instead of annually.