As of November 8 the US dollar, the common currency of exchange for tourists in Cuba, is no longer legal tender. Cubans will be continue to be allowed to hold dollars, but transactions in shops, restaurants, .... will have to be in "peso convertible".

The sign of peso convertible is: CUC

This "peso convertible" will replace the dollar as currency in the so called "dollar shops" or "tiendas in divisa". Restaurants, taxis, hotels, ... which previously denominated their prices in dollars and will therefore be the "tourist" currency. These prices are now converted "one to one" to peso convertible. Any payments you make with credit cards will also be peso convertible for which you will be charged your local currency equivalent of 1 U$ when you receive your credit card bill. As such not much changes.

What does change is that a 10% "tax" is imposed on any transaction exchanging dollars to peso convertible. This means that the "exchange value" of the US dollar is effectively reduced to 90 cent of a peso convertible both for Cubans and tourists.

Let me focus on the effect that this will have for the casa owners: if they continue to accept dollars without raising prices they will effectively lose 10% as they will have to pay their taxes and purchases in peso convertible. This creates a difficult dilemma for them: in which currency to charge their guests and which prices to announce on their sites? I have been in contact with a series of them and the consensus solution seems is that all prices will be stated in peso convertible and can be paid in any easily exchangeable foreign currency the conversion calculated on the basis of the exchange rates that are valid at the time. In practice the most wanted currencies will be the Euro and the Canadian dollar. Given the exchange value of the dollar (90 centavo peso convertible), people wanting to pay dollars will find that the dollar cost of a room has gone up by 10%.

As such people from Europe will be better off taking Euros with them to Cuba. Canadians are best to take their national dollar though Cubans prefer Euros. These can then be used in Cuba as direct payment (take sufficient small denomination notes and coins in that case as for a while people will have little change) or can be exchanged for peso convertible. All others are best to convert their currency to any of the two above in their home country or exchange their national currency for peso convertible in Cuba. Note that only a limited range of currencies is easily exchangeable in Cuba except is a very few specialist exchange houses in Havana and the tourist resorts.

It is still early days and the situation will become clearer as time goes by. You will find though that Cubans will still like to hold foreign currency as a hedge against any changes in the value of the peso convertible and casa owners have indicated that payment in foreign currency is still very attractive to them.