We are going on holiday to Cuba in November, and according to the guidebooks, the only method of local payment is US dollar notes. However, I have seen traveller comments on the internet and all recommend Euros or Sterling. Which is correct? Lumsden Mathieson, Dumbarton

Doc Holiday responds: Last year there was a shake-up in the Cuban currency system, which has left all but the very latest editions of guidebooks to Cuba containing incorrect information.

In a nutshell, the US Dollar is no longer in circulation on the island. The Cuban authorities say that this is a reaction to a "tightening in the US economic war against the people of Cuba", but the result is that you should avoid taking US Dollars, and instead opt for Pounds Sterling or the Euro.

Confusingly, there are two types of Peso in the country: the Cuban Peso, which can’t be imported or exported from the island, and the Convertible Peso (CUC), which equals almost one dollar and can be exchanged for foreign currencies at a bank or bureau de change. For tourist purposes, you’ll need the CUC most of the time, although you might receive change in the other Peso after you have just paid for something with the CUC. It’s worth having a small supply of non convertible Pesos anyway, as this will come in handy paying for public transport and buying market food.

The days of using Dollar bills as cash in Cuba may be over, but you can still exchange dollars for Peso’s when you arrive. However, this isn’t advisable, as there is a 10 per cent surcharge for doing this, which isn’t levied if you change other major currencies, like Sterling or Euros.

Incidentally, traveller’s cheques can be exchanged at some banks, but there is a 2.5-4 per cent commission for on each transaction. Also, credit cards can be used in the Havana and the main tourist centres (Visa and Mastercard are the most widely accepted), but remember that they won’t be any use in smaller towns, and that American Express (or cards issued by US banks or their subsidiaries) aren’t accepted anywhere.

Beware of scams that play on the confusion between the two types of Peso. Our writer, Brian Schofield almost got stung on his recent visit, when a friendly guide offered to swap all of his foreign currency for a covert currency that he claimed would double Brian's spending power.

Once you are aware though, the differences are easy to spot. Look at www.webhavana.com, which has facsimiles of both currencies side by side. Another good resource, and with details on the latest currency situation, is www.cubatravel.cu

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