Many currencies are used to pay for goods and services throughout the islands of the Caribbean. Although a handful of these currencies are given a floating exchange rate by their respective Central Banks, the majority operate under a fixed exchange rate regime and are pegged to the United States dollar. (For more, see Currency Exchange: Floating Rate vs. Fixed Rate.)
Between 1935 and 1965, the British West Indies dollar was widely used throughout the Caribbean. It was later replaced by the Eastern Caribbean dollar. Although the Eastern Caribbean dollar still exists, many islands have since decided to establish their own national currency. Below is a brief overview of the most common currencies that can be found throughout the Caribbean.
Eastern Caribbean Dollar
The Eastern Caribbean dollar is one of the region's oldest currencies. Issued by the Eastern Caribbean Central Bank, the Eastern Caribbean dollar serves as the official currency for the islands of Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines. These islands make up an economic union called the Organisation of the Eastern Caribbean States (OECS).
The currency code for the Eastern Caribbean dollar is XCD, and it operates under a fixed exchange rate regime. Since July 7, 1976, it has been pegged to the United States dollar at an exchange rate of US$1 equals XCD$2.70.
Up until 1973, Barbados ued the Eastern Caribbean dollar as its official currency. Since then, the country has used the Barbados dollar. Like the Eastern Caribbean dollar, the Barbados dollar also operates under a fixed exchange rate regime pegged with the United States dollar at a rate of US$1 for BBD$2.
Trinidad and Tobago Dollar
The Trinidad and Tobago Dollar, currency code TTD, is the official currency for the twin-island nation of Trinidad and Tobago. It is also one of the region's only currencies to operate under a floating exchange rate regime. This means that the Central Bank of Trinidad and Tobago has allowed for its dollar to fluctuate in response to supply and demand in the foreign-exchange market.
The dollar came into existence In 1964, replacing the Eastern Caribbean dollar. From 1964 and 1968, Grenada used the Trinidad and Tobago dollar as legal tender before returning to the Eastern Caribbean dollar.
The Jamaican Dollar, currency code JMD, is issued by the Bank of Jamaica. Like the Trinidad and Tobago Dollar, it operates under a floating exchange rate regimes. In 2013, the exchange rate weakened to US$1 to JMD$100 and US$1 has not exchanged for less than $110 since 2014. (For more, see 6 Factors That Influence Exchange Rates.)
Due to high levels of inflation, the $1, $2, $5, $10 and $20 coins and notes are rarely used, making the $50, $100, $500 and $1000 notes the most frequently used forms of the currency.
United States Dollar & Euro
Many islands in the Caribbean do not have their own currency, and, as a result, use foreign currencies as their official medium of exchange. For example, Guadeloupe, Martinique, Saint Barthélemy and Saint Martin, i.e. the islands that make up the French Caribbean, use the euro. Meanwhile, the British Virgin Islands, Puerto Rico, Turks and Caicos Islands and United States Virgin Islands use the United States dollar.
It is also not unusual for most businesses throughout the region to accept the United States dollar, British pound sterling and the euro as many tourists do not walk around with much local currency.
The Bottom Line
As many as ten currencies are used among the islands of the Caribbean. A fixed exchange rate regime is the most common exchange regime found in the region; however, a few of the larger islands operate on a floating exchange rate system. While most islands have their own national currency, the eight members of the Organization of the Eastern Caribbean States share a common currency. Additionally, in some countries foreign currencies, such as the euro and United States dollar, are used.