Understanding the XCD (Eastern Caribbean Dollar)

The XCD, denoting the Eastern Caribbean dollar, stands as the official currency shared by a cluster of eight Caribbean island nations: Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines. This currency, established in 1965, replaced the British West Indies dollar and remains one of the region’s oldest currencies in active circulation. Presently, the exchange rate stands at 1 XCD equal to USD $0.37 as of September 2022.

Key Takeaways

• The XCD (Eastern Caribbean dollar) became the official currency of the Organisation of the Eastern Caribbean States (OECS) in 1965, supplanting the British West Indies dollar.
• It is the accepted currency in island nations like Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines.
• The Eastern Caribbean dollar’s management falls under the Eastern Caribbean Bank, with a peg to the US Dollar since 1976.

Understanding the XCD (Eastern Caribbean Dollar)

The Eastern Caribbean dollar operates as the primary currency for the Organisation of the Eastern Caribbean States (OECS), established in 1981 to streamline economic and trade policies across the ten Eastern Caribbean islands. While the XCD is utilized in eight participating countries, Martinique aligns with France, using the euro, and the British Virgin Islands transact in US dollars.

Upon inception, the Eastern Caribbean dollar replaced the British West Indies dollar on par. Initially, the Eastern Caribbean Currency Authority regulated the currency issuance, pegging it at 4.8 XCD to 1 GBP.

In 1976, the currency was realigned to the US dollar at a rate of 2.7 XCD to 1 USD. Subsequently, the Eastern Caribbean Bank, established in 1983, took over the currency issuance, maintaining the US dollar peg.

The Eastern Caribbean Bank ensures liquidity regulation across its member states, fostering economic and monetary stability by supporting economic growth and a secure financial system. It views its currency peg as crucial for maintaining price stability and curbing inflation in the region.

Other Caribbean Currencies

Despite the proximity of many Caribbean nations and their small size, numerous countries have their own currencies. For instance, Barbados, previously under the Eastern Caribbean dollar, transitioned to its currency in 1973, pegged with the US dollar at 2 Barbadian dollars to 1 USD.

In contrast, the Trinidad and Tobago dollar, approximately as old as the Eastern Caribbean dollar, began with a US dollar peg and later adopted a floating rate in 1993. Similarly, the Jamaican dollar, used exclusively in Jamaica and issued by the Bank of Jamaica, fluctuates against other currencies, with high inflation leading to the phasing out of lower denominations.

While various currencies are prevalent in the Caribbean region, most tourist destinations accept major global currencies like the US dollar (USD), British pound sterling (GBP), and the Euro (EU).