updated 11/4/2004 11:14:18 AM ET 2004-11-04T16:14:18

Because of the huge demand to dispose of the U.S. bills that were legal tender in communist Cuba for a more than a decade, the Central Bank said Thursday that people will have an extra week to exchange their America money for a local currency tied to the dollar.

The need to extend the two-week transition period indicated that economic planners here underestimated how many U.S. dollars had accumulated on the island since they were made legal tender as a temporary measure to capture hard currency after the loss of Soviet aid and trade.

President Fidel Castro has said the move is necessary to protect the country from an increasing U.S. crackdown on foreign banks sending American cash to Cuba.

"The attitude of our people in the face of the most recent economic aggressions by the U.S. government has been an example of patriotism, discipline and confidence in the revolution," the

Central Bank said in a note published in the Communist Party's newspaper Granma.

"Considering this exemplary reaction, and taking into account the repeated requests of the people, it has been decided to extend until Sunday Nov. 14 the period stated" to exchange dollars into convertible Cuban pesos without paying a new 10 percent surcharge.

Previously, the last day to change American money without the fee was Sunday.

Independence from U.S. currency
The Central Bank note said that the rest of the resolution issued Oct. 25 to eliminate U.S. dollars from general circulation was unchanged.

Banks will open Saturday and the weekend of Nov. 13-14 to help Cubans change their U.S. dollars into convertible pesos before the deadline, it added.

The Cuban currency, like that of many other smaller nations, has no value outside the country. But Cuba relies heavily on imported goods that must be purchased with dollars or other convertible foreign currencies and after the collapse of the Soviet Union, with which Cuba conducted barter trade, Havana's need for hard currency grew.

The currency switch appears aimed at eliminating Cuba's dependence on the money of its No. 1 enemy -- the United States -- for hard currency reserves, building up new sources of convertible foreign funds, and reasserting centralized control over the economy.

The administration of U.S. President George W. Bush this year has recently moved to restrict the flow of American currency into Cuba, with severe limits on the amount Cuban exiles can send relatives on the island and Federal Reserve fines imposed on international banks sending U.S. dollars here.

Central Bank President Francisco Soberon told The Associated Press earlier this week he has been surprised at the large amounts of American dollars Cubans are changing to avoid the new surcharge.

"It's been above our expectations," Soberon said of the quantities changed. "A lot of people are opening accounts in important amounts of money. We didn't know how much people were saving under their mattresses."

Soberon did not provide estimates on how much had been changed thus far, but said in the first week there were 700,000 transactions to exchange dollars or open dollar accounts across the island of 11.2 million people.

Some independent analysts have estimated that several hundred million American dollars would be exchanged into convertible pesos before the surcharge takes effect.

Last week, there were numerous reports of smaller money exchange operations in Havana shutting down early after their daily allotment of 50,000 convertible pesos ran out. Nevertheless, Soberon insisted that Cuba has printed enough convertible pesos to meet demand.

Economic planning
Soberon told the AP Monday that after the changing period ends economic planners will have a much better idea of how much cash is circulating on the island.

"To plan our monetary policy, to plan our internal finance, we will know how many convertible pesos are in circulation," said Soberon, adding it was impossible to know previously how many dollars existed in Cuba.

"It gives us much more control over the financial variables in the Cuban economy," Soberon said.

The dollar is not banned and Cubans can still hold the currency, although it will not be of use to buy goods or services until changed into the convertible peso.

The 10 percent surcharge taking effect Nov. 15 for those selling dollars will not apply to other foreign currencies such as the European Union's euro or the Canadian dollar. There will be no surcharge to buy dollars.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments