In Cuba there are two currencies in Cuba’s monetary system: The Cuban peso also called Moneda Nacional or CUP. 1 CUP = $0.04. The CUP is what Cubans are paid in and it correctly reflects inflation since the collapse of the Soviet Union in 1989 which led to a collapse in the Cuban economy, from which it was so heavily tied. Food in agricultural markets and food sold in open-air restaurants all have CUP prices. For example, a small sandwich with egg, lettuce, tomato, ketchup and mustard on it would be 15 moneda nacional and a cup of juice would be 5 CUP.
The second currency is the Convertible Cuban Peso (CUC) which is used by fancy restaurants, hotels and to buy/sell anything that was imported. 1 CUC = $0.95. The CUC was created after the collapse of the Soviet Union during Cuba’s Special Period in order to maintain trading relations with countries outside of Cuba. Certain things are only sold in CUC, such as shampoo, toilet paper, internet and packaged goods like chips and olives.
1 CUC = 24 CUP, however, when you have CUP and want to convert it into CUC you must give 25 CUP for every 1 CUC, not just 24. So you lose 1 CUP for every CUC. In other words, the rub is that every month Cubans receive their salary in strictly moneda nacional (CUP) and must convert a portion of it to buy necessary goods – yet every month they lose money in an unfavorable transaction – every single time. And considering the monthly salary is around $17USD, losing 5 cents for every CUC adds up very quickly.
It has been very difficult navigating money here, firstly because it is difficult to become accustomed to how much something costs – example, does the bus cost $1USD or $0.04? Are chips imported from the US $3USD or $0.12USD? And so on. (The bus is $0.04 and the chips are $3). Not to mention, the money looks extremely similar and there are bills and coins in both currencies. However, what has been so difficult is understanding how Cubans navigate between the two currencies. Some work in hotels or in Taxis to get money from tourists who all wield CUC. Others slink around the street looking quite close to skeletons, very very thin and without something to subsidize their monthly income.
For example, the family that our group lives in earns 30 CUC every night we sleep there, for five rooms. They make more money from my room in one night than an average Cuban earns in a month. People say this is socialism, but it is very clear to see that what the textbook says and what actually lives and breathes are two very different things. It is so easy to see the inequality and that the people at the top are people who are working with tourists, and the people at the bottom are those who are not. And with the country opening up more and more it is imparative to understand how unsustainable the dual currency system is in Cuba and the government-distributed monthly salaries. Because a country can not survive on strictly a government salary, but a country cannot survive also if the only opportunity lies in tourism or in leaving the country.
I heard today that Obama met with Raul in Panama to discuss the opening of a US embassy here in Cuba. Things are happening quickly and time will tell what will happen with Cuba.