From December 31, 2011 to August 2 2012, INR declined by nearly $29 million, which represents 5.1% of the total.
According to an article in Tiempo.hn "The mainstay of foreign exchange is still remittances sent by around one million Hondurans who live mainly in the United States and other European countries like Spain. The amount in remittances is larger than other currency generators such as the export of products.
A record amount of $1.938 billion in gross international reserves has been recorded in the country, a reflection of the stability and economic growth in recent years.
Mario Arana, former president of the Central Bank of Nicaragua (BCN) notes that the policy of fiscal discipline that has been maintained, has allowed the reserves to accumulate, which provide an optimistic outlook on any external shocks generated by the current problems of the industrialized economies.
The Higher Council of Private Enterprise has welcomed a proposal by President Ortega, to put international reserves funds into the Banco del Alba , provided legal procedures are followed.
"What we want to make clear is that it has to be in line with the law, on the one hand, but in the medium term, yes, it will mean (...) net resources for Nicaragua, we have to see it in that context," said Jose Adan Aguerri , president of COSEP, according to LaPrensa.com.ni.
Markets closed with the dollar at ¢518.34, ¢7.88 higher than the day before, after the Costa Rican Central Bank's (BCCR) decision to increase foreign exchange reserves.
Since the BCCR announced the news, the dollar's price increased steadily, reaching a high of ¢523,01 before finally closing at ¢518.34.
Rodrigo Bolaños, president of BCCR, said that, "in the coming days it will be interesting to see what direction the exchange rate takes because just the announcement alone has caused it move up by several colones," reports Nacion.com.
The monetary authority has launched a scheme to acquire international reserves, immediately causing the exchange rate to rise.
In his blog for Nacion.com the analyst Jorge Guardia highlights that this intervention represents a trimming and sprucing within the limits and a fundamental change in Central Bank (BCCR) policy that lacked due transparency.
Oscar E. Mendizábal, editor of the Blog “Desde Guate” (From Guatemala), gathers and analyses the main factors influencing the Central American economy (except Panama) during the first six months of this year.
IMF advices: contain current spending, especially the wage bill, and strengthen the finances of public enterprises, public pension funds, and municipalities.
March 25, 2010
Mario Garza, resident representative of the International Monetary Fund (IMF) in Tegucigalpa, issued the following statement today:
“With the objective of assessing developments and the near-term outlook of the Honduran economy, an IMF mission met with President Porfirio Lobo, the economic cabinet, congress, and private sector representatives. The mission wishes to thank the authorities for their excellent cooperation and candid discussions. In 2009, the global economic slowdown and the political crisis contributed to an economic contraction of 2 percent. In the fiscal area, despite a decline in public investment, the fiscal deficit rose markedly due to a substantial increase in current spending, mainly the wage bill, leading to a large increase in the public domestic debt. In the context of an expansionary monetary policy, the increase of central bank credit to the public sector contributed to a loss of international reserves. The authorities and the mission shared the view that maintaining expansionary policies is not sustainable and that a solid macroeconomic framework is required to foster economic growth in Honduras.
The Central Bank finished 2009 with $2.11 billion in reserves, 14% less than in 2008.
In 2009, the bank lost $343.7 million worth of reserves when compared to 2008. The current reserves cover 3.4 months of imports, slightly above the accepted minimum of 3 months.
"Sandra Martínez de Midence, Central Bank president, reported that this reduction can be explained by internal and external reasons, such as a reduction in remittances, the suspension of international aid and less exports", reported Elheraldo.hn.
Moderated reduction in IMAE, drop in international reserves, pressure on the exchange rate and a worsening fiscal situation.
Costa Rican Economy Still in Recession
An improvement in economic activity has been observed in the second trimester. From April to June, the Monthly Index of Economic Activity (IMAE), recorded an annualized growth rate of 5.9%, while it had contracted at an annualized pace of -0.9% in the first trimester. In the first semester of the year, economic activity diminished 3.9% when compared to the same period of last year. In June, IMAE recorded a monthly increase of 0.34%, while the variation for the last 12 months was 2.2%, lower than the 2.8% drop presented in May. The lowest yearly change was recorded in February, at -5.1%.
A precautionary agreement signed by the previous administration in January has been reactivated.
This was announced by President Mauricio Funes, who remarked that even though the agreement had a validity of 6 months, it had been rendered ineffective by lack of compliance with the established conditions.