What Is the Cuban Peso (CUP)?
CUP is the currency abbreviation for the Cuban peso, or "national peso" is 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 as well as the currency in which most Cubans receive their salaries. As of August 2020, 1 CUP is equal to rough U.S. $0.04.
The second currency is the Cuban convertible peso (CUC), which is used more for international finance and forex purposes and is pegged to the U.S. dollar at 1:1.
- The Cuban peso (CUP), or "moneda nacional" is one of two official currencies of the island nation of Cuba, and is used mainly for local commerce.
- The other currency, the Convertible peso (CUC), exchanges at a rate of approximately 26:1 and is pegged to the U.S. dollar.
- The U.S. has maintained an economic embargo against the Cuban communist government for decades, making its currency restricted in American markets. Similarly, Cuba stopped accepting U.S. dollars in 2004.
Understanding the Cuban Peso
The CUP is the national currency of Cuba used in local economic exchange, 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 prevailing currency used in the country during that time was the Spanish real. While Cuba gained independence from Spanish rule in 1898 and became a republic in 1902, the Spanish reales were replaced by the Cuban peso as the country’s official currency back 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. After the fall of the U.S.S.R., the Cuban peso began to float freely against other currencies before the introduction of the Convertible Peso (CUC).
The Cuban Central Bank, which was established in 1997, is the government authority which issues the national currency. The country’s inflation rate in 2019 was 5.7% and its economy grew at just 0.5%.
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 26 CUP.
The Cuban Convertible Peso was introduced in 1994 and comes in denominations of banknotes of 1, 3, 5, 10, 50 and 100 CUC. 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 most Cuban businesses in November 2004. The country withdrew the U.S. dollar in retaliation for continued American sanctions. The United States has had a trade 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.