There are two currencies circulating in Cuba, Cuban Pesos (CUP) and Cuban Convertible Pesos (CUC). Prior to November 2004 US dollars were in wide circulation on par with the CUC, but the government discontinued that and they are no longer used.

CUC is the currency most tourists will use in Cuba. It is how you will pay for hotels, official taxis, entry into museums, meals at restaurants, cigars, rum, etc. Conversion into CUC can be done at exchange houses (casa de cambio, or cadeca). These are located in many hotels and in other places throughout the cities. CUC are valued at 28 times the value of CUP. Tourists are permitted to import or export a maxiumum of CUP 100 or CUC 200 at any one time.

CUP are also known as local Pesos and Moneda Nacional (National money). As of Nov 2007, 1 CUC = 28.62 CUP. There is a limited range of goods that can be bought for local pesos, and these are transactions carried out in agricultural markets or from street vendors. Fruits, vegetables, fresh juices and snacks from street vendors are among the things CUP can buy. Because the products that can be purchased with CUP are limited, it is not a good idea to change more than CUC 5-10 into CUP at a time, as the CUP will last for a good while.

The USD is no longer a proxy currency in Cuba; in fact, there is a 10% penalty to exchange USD. Cuba travelers should AVOID US DOLLARS! This is especially important, because previous visitors will recall the USD was used everywhere, older edition guidebooks now have dated (BAD) information, and so many global tourists instinctively carry USD. Although it is possible to exchange USD, you will pay a large premium to do so!

For the overwhelming majority of travelers, it is completely unnecessary to exchange your money (losing) twice. Check to see if your home currency is accepted at the Banco Metropolitano. Over 75% of Cuba visitors hold Cdn $, Sterling or Euros: perfectly acceptable. But Mexican Pesos, Swiss Francs, Japanese Yen, Australian Dollars and at least four other currencies are also reportedly converted at major banks in Cuba. If you must change a large sum of home currency for another (and then into CUCs), it is prudent to research exchange rates in advance. For the basic needs of others, getting Euros at your local bank will probably be the easiest & cheapest option.