What is the CUP
CUP is the currency abbreviation for the Cuban peso, one of the two official currencies used in Cuba. The Cuban peso is the national currency of Cuba and is the primary currency used by Cuban nationals and the currency in which most Cubans receive their salaries.
Breaking Down CUP
The CUP is issued by the Central Bank of Cuba. CUP coins are minted in 1, 2, 5, 20, 40, $1 and $3 denominations. Banknotes are printed in $1, $3, $5, $10, $20, $50 and $100 denominations. One cuban peso is made up of 100 centavos.
Cuba was a Spanish colony for several centuries, and the currency used in the country was the Spanish real. While Cuba gained independence from Spanish rule in 1898 and became an independent republic only in 1902, the Spanish reales were replaced by the Cuban peso as the country’s official currency in 1857. At the time of the switch, 8 pesos were worth 1 real.
The currency was pegged to the U.S. dollar in 1881, but switched to being linked to Soviet rubles in 1960.
The Cuban Central Bank, which was established in 1997, is the government authority which issues the national currency. The country’s inflation rate in 2017 was 4.8 percent.
The Cuban Peso vs the Cuban Convertible Peso
In addition to the CUP, Cuba has another national currency, known as the Cuban convertible peso, which is abbreviated as CUC. The CUC is sometimes also referred to as the "tourist dollar," because it is tied to the U.S. dollar and is generally traded and used by Americans in Cuba. Consumer goods on the island are often priced in CUC and it is also used for foreign trade. The CUC is pegged to the US dollar at a rate of one to one, and 1 CUC is worth about 25 CUP.
The Cuban Convertible Peso was introduced in 1994 and comes in denominations of banknotes of 1, 3, 5, 10, 50 and 100 convertible peso. In 2013, the council of ministers in Cuba approved a plan to unify the two currencies, however the change has not gone into effect.
The American dollar ceased to be accepted by Cuban businesses in November 2004. The country withdrew the U.S. dollar in retaliation for continued American sanctions. The United States has had an embargo against Cuba that has been in place since 1961 and remains in effect to date. However, efforts to re-establish diplomatic relations between the two countries began in 2014 but have since stalled.