The East Caribbean Dollar (XCD) is the official currency of eight countries and territories in the Eastern Caribbean region that form the Eastern Caribbean Currency Union (ECCU).
These countries and territories include Antigua and Barbuda, Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Montserrat, and Anguilla.
The East Caribbean Dollar was introduced in 1965, replacing the British West Indies Dollar.
The Eastern Caribbean Central Bank (ECCB) is responsible for issuing and managing the East Caribbean Dollar.
Exchange Rate System
The East Caribbean Dollar operates under a fixed exchange rate system, where its value is pegged to the US Dollar (USD) at a rate of 1 USD = 2.70 XCD.
This fixed exchange rate system provides stability for the East Caribbean Dollar against fluctuations in the foreign exchange market, offering a predictable exchange rate for international trade and investment in the region.
Subdivisions and Denominations
The East Caribbean Dollar is subdivided into 100 smaller units called cents.
Coins are issued in denominations of 1, 2, 5, 10, and 25 cents, as well as 1 Dollar.
Banknotes are available in denominations of 5, 10, 20, 50, and 100 Dollars.
Economy and Challenges
The economies of the countries and territories using the East Caribbean Dollar are diverse but generally small and dependent on tourism, agriculture, and, in some cases, offshore financial services.
The region’s tourism industry is vital, attracting visitors from North America and Europe, while agriculture focuses primarily on the production of bananas, sugar, and other tropical fruits.
The fixed exchange rate system can help promote stability and economic growth in the region, but it also exposes the countries to external shocks and requires close coordination of fiscal and monetary policies among the ECCU members.
Summary
In summary, the East Caribbean Dollar is the official currency of eight countries and territories in the Eastern Caribbean Currency Union, managed by the Eastern Caribbean Central Bank.
The currency operates under a fixed exchange rate system, pegged to the US Dollar, and is subdivided into cents, with various banknote and coin denominations.
The economies of the ECCU countries are diverse but generally small and dependent on tourism, agriculture, and offshore financial services, with the fixed exchange rate system providing stability and predictability for international trade and investment in the region.