Elperiodico.com.gt outlines, "The Bank of Guatemala (Banguat), informed that payments in foreign currencies reached Q21.3 billion in December and Q23.0 billion during February, while payments in Quetzals went from Q106.2 billion to Q105.6 billion over the same period of time. This means there are fewer Quetzals in the economy, triggering an appreciation of domestic currency against a greater presence of foreign exchange."

Beyond the reasons of each economy, the depreciation of the dollar against local currencies is a constant in most Latin American economies.

If this phenomenon is temporary or permanent, reflecting changing conditions of international trade and in particular the health of the U.S. economy, we will know in the medium term. On the short term we will see foreign exchange movements caused by weakness in small economies, especially those in Central America, which are particularly sensitive to variations and inconsistencies of government monetary policies or simply just by speculation.

Source: elperiodico.com.gt

More on this topic

Guatemala: How to Curb Appreciation of the Quetzal

February 2017

By changing the exchange rate rule and issuing certificates of deposit in dollars, the Banguat aims to minimize the downward trend that has been seen for months in the price of the dollar against the Quetzal.

An increasing inflow of remittances coming into the country is the main reason behind the excess of dollars in the economy, a figure that the Bank of Guatemala has estimated at $1 billion.

Guatemala and the Exchange Rate Debate

February 2017

Although the export sector continues to denounce the loss of competitiveness because of appreciation of the quetzal against the dollar, the Central Bank insists that the exchange rate will remain dependent on market factors.

A  year ago the complaint was the same. Exporters asked the Central Bank for a review of the exchange scheme to induce a devaluation that would allow them to recover some of the competitiveness lost abroad because of the exchange rate. The situation today has not changed, and exporting companies have asked for the Ministry of Agriculture to intervene in this matter.

Guatemala: Quetzal Strengthens Against Dollar

July 2016

Strong growth of remittances and savings in the oil bill are two of the factors responsible for an increase in the supply of dollars which is putting downward pressure on its price against the quetzal.

Appreciation of the Guatemalan currency against the US currency is also due to lower demand for dollars in the local market, according to statements made by the president of the Bank of Guatemala to S21.gt. 

Appreciation of Quetzal in Guatemala

October 2014

The increase in remittance income is the main factor that has led to the value of the local currency against the dollar rising to its highest level in the past two years.

While in other Central American countries local currencies have tended to lose value against the dollar, in Guatemala the strong flow of foreign exchange into the country has put upward pressure on the supply of dollars causing an appreciation of the quetzal, which was quoted on 5 October at Q7,63 to the dollar.