If you’ve found yourself in a store, restaurant or hotel that won’t accept (CUP) in Cuba you’re in a government run establishment. Any and all businesses connected to the Cuban Government will want to be paid in foreign currency.
Here’s what you need to know about establishments that won’t accept Cuban currency in Cuba.
The Local Cuban Currency (CUP) is Worthless
The Cuban Peso (CUP) which is also called Moneda Nacional (MN) has no intrinsic value. It isn’t backed up by anything except the word of the Cuban Government. And their word internationally is worth less than paper their currency is printed on.
There are no gold reserves, assets or anything backing the Cuban Peso (CUP). Just the word of the Cuban Government that they will pay their debts.
The Cuban Government says $1USD is worth 24CUP. Yet none of the citizens of Cuba actually agree. The real exchange rate in Cuba is much higher than the government rate.
The Cuban Government prints more money by the day. And this money printing devalues the money that is already in circulation.
The CUP is on a steady decline against all major currencies. And the Cuban Peso will not recover or avert its decline against all other currencies. It’s only going one way, which is down.
Because the Cuban Government’s debts and expenses are larger than what the country earns each year, they will continue to print money. And the real value of the Cuban Peso will continue to decline.
Cuba has the same problem that afflicts Argentina’s currency.
Because the Cuban Government know that their own currency is worthless, they will always want to be paid in foreign currency.
And you can expect the Cuban Government to avoid buying back their own currency at the airport CADECA as you leave Cuba. So only exchange your foreign currency for Cuban Pesos (CUP) as you need it.
The Cuban Government Needs Foreign Currency
Whenever you interact with any business owned by the Cuban Government or linked to the Cuban State in Cuba they will only accept foreign currency at their own predetermined exchange rates.
The Cuban Government won’t accept their own currency.
Part of the farce that is Cuban economics is how the Cuban Government hoovers up foreign currency and pays local Cubans in local pesos (CUP). Pesos that it prints and that have no real value.
In a bygone era before Donald Trump’s presidency the Cuban Government would take all the foreign cash it collected in Cuba and fly it in cargo planes to other nations, including Switzerland. The rumour amongst the diplomatic community in Cuba is that these rat holes have apparently been shut down.
Because it’s much more difficult now for the Cuban Government to deposit its foreign cash in foreign banks, it prefers electronic transactions. The Cuban Government will often want to be paid in foreign currency electronically.
That is to say Cuban Government owned, operated or partnered establishments will want to be paid in foreign currency by bank or credit card. They will not want to accept cash. And of course they will want to use their own exchange rates.
If you’re visiting a government owned restaurant or staying in a government partnered hotel in Cuba they will want you to pay them electronically in foreign currency. And they will apply their own ‘official’ exchange rate.
Dollarized Resort Towns In Cuba (i.e. Varadero and Cayo Coco)
In popular resort towns like Varadero and Cayo Coco the Cuban Government owns or partners with the majority of the businesses frequented by tourists. Because these businesses are government linked they won’t accept CUP in Cuba.
Towns like Varadero and Cayo Coco are in essence dollarized. And you’ll have a hard time using the local Cuban Peso at tourist oriented businesses. Everyone will want to be paid in foreign currency.
You can expect towns like Varadero and Cayo Coco to become increasingly more expensive to visit. If you set foot outside of your all inclusive resort you can expect to get sticker shock at some of the prices you will need to pay for goods and services.
But you can reduce your costs in resort towns like Varadero and Cayo Coco by selectively visiting private businesses and using private service providers.
Instead of a yellow government run taxi, take a La Nave. Instead of paying the hotel for wifi, get a Cuban SIM card. Or choose Airbnb’s over hotels. And don’t walk into MLC stores and instead seek out private markets or buy from private street vendors.
Where Can I Get More Information About Cuba?
I’ve made a Cuba Frequently Asked Questions Page (FAQ) available on this website. And I would strongly advise you to read it before travelling to Cuba.
My Cuba FAQ page will save you a lot of time and a significant amount of money on your trip to Cuba. Cuba is not the sort of destination in which you can just arrive unprepared.
Read the Cuba FAQ Page here.