Critics say the Cuban peso is still over-valued Cuba is devaluing its currency by about 8% compared to the US dollar as part of efforts to revive the economy.
The hard-currency convertible peso used mostly by tourists and foreign firms will now be on a par with the dollar.
The central bank said the aim was to boost exports and local production.
The move will increase the value of remittances received by many Cubans with relatives in the US, and is intended to make the island more affordable for tourists.
The government says it keep a 10% tax on exchanges with the dollar, which it describes as compensation for the "irrational and unjust" US economic embargo.
Each convertible peso will still be worth 24 of the standard pesos in which most Cubans are paid under the communist island's two-tier currency system.
It is the first time Cuba has revalued its currency in six years.
The decision will make foreign imports more expensive, but the government said it hoped to compensate for this by increasing domestic production, especially food.
Debt progress In a statement published in the official communist party newspaper, Granma, central bank president Ernesto Medina said limits placed on payments to foreign companies introduced in 2008 had also been reduced.
He added that there had been "significant advances" in the renegotiation of debt with Cuba's main foreign creditors.
Last year Cuba launched a programme of major economic changes designed to reduce the state's overwhelming role in the economy and promote private enterprise.
Under the plan announced by President Raul Castro last September around a million state workers were due to be laid off and encouraged to find new jobs in the private sector.
Thousands have already applied for licenses to set up small businesses, although the timetable for redundancies has been delayed.
The changes to Cuba's socialist system are due to be discussed at a rare Communist Party Congress in April.
President Castro has said that the changes are vital to overhauling the economy, which is burdened by debt and the effects of the long-standing US trade embargo, as well having to fund costly social programmes,