Date:   10/26/2004 9:33:18 AM ( 20 y ago)
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CUBA TO END CIRCULATION OF US DOLLAR NOV. 8TH

By: Never_Surrender Monday 25 Oct 2004

Reuters
Monday, October 25, 2004; 9:37 PM

By Anthony Boadle

HAVANA (Reuters) - Cuban President Fidel Castro, seeking to rid his country of the currency of his arch-enemy, said on Monday Cuba was ending circulation of the U.S. dollar as of Nov. 8 in response to tightened American sanctions.

Cubans, foreign residents and tourists will have to use locally printed convertible pesos, equal in value to the dollar, a Central Bank decree said.

"As of Nov. 8, the dollar will not be accepted in our shops, which will only accept convertible pesos," it said.

A 10 percent commission will be charged for changing dollars into the local currency, according to the decree read on a special television broadcast attended by Castro.

Appearing on television in a sling only five days after falling and fracturing a knee and an arm, Castro said the issue was so important that he had to be there despite Wednesday's accident that left his left leg in a plaster cast.

"The empire is determined to create more difficulties for us," he said, referring to Bush administration steps to restrict travel and cash flows to the island nation.

The dollar was legalized in Cuba in 1993 after the collapse of the Soviet Union plunged the island into deep economic crisis and forced it to open up to tourism and foreign investment.

Dollars became the dominant currency and are used to buy most consumer goods in dollar stores that will now only accept the local currency.

The decision will effectively tax remittances from the United States, a major support for the cash-strapped Cuban economy that amount to an estimated $1 billion a year, unless they are sent in other currencies.

The government encouraged Cubans living abroad to send cash remittances to their relatives in Cuba in other currencies, such as the euro, the British pound, Swiss franc and Canadian dollar, to avoid exchange costs.

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A four-decade-old U.S. trade embargo against his communist government prohibits the use of dollars in transactions with Cuba unless they are licensed by the U.S. Treasury.

Foreign banks were put on guard in May when the Federal Reserve fined UBS, Switzerland's largest bank, $100 million for illegally transferring freshly printed dollar notes to Cuba and three other countries subject to U.S. sanctions.

Foreign bankers in Havana said this created serious problems for Cuba to deposit its dollars abroad and renew bills in circulation.

Cuba's tourism is based on the dollar, though euros are accepted as currency in some resorts. Tourists will have to exchange their currency into convertible pesos, though the 10 percent commission will only apply to dollars, the decree said.

The commission will not affect credit cards payments. Cards issued by U.S.-based banks are not valid in Cuba.

Cuba took the first step to curb dollar circulation last year when it banned state corporations from using the U.S. currency in their domestic operations.

President Bush launched a strategy in May to undermine Castro's government by tightening restrictions on travel from the United States and the amount of dollars licensed visitors could spend on the island.

Castro, who has outlasted nine U.S. presidents and survived the demise of the Soviet Union, said his socialist system will prevail.

"The destiny of this country was decided long ago and nothing can intimidate us," he said.


 

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