Banguat Changes Exchange Rate Calculation

The Bank of Guatemala will change the methodology to include all foreign currency exchange transactions.

Monday, March 23, 2009

At present, the entities participating in the Institutional Foreign Exchange Market only report to the Bank of Guatemala when the transaction is greater than or equal to $50 thousand to calculate the reference exchange rate.

According to an article in elperiodico.com.gt, as of May 11, by a resolution of the Monetary Board, banks must report all daily foreign currency exchange operations.

According to the article, several consulted experts considered that "this modification to the methodology of calculating the exchange rate to include operations that banks perform with the public under $50 thousand could mean that the reference exchange rate could go up or down several points."



More on this topic

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For the IMF, recent steps towards a more flexible exchange rate, especially by reducing currency surrender requirements, are positive.

The international organization encouraged the country to a gradual transition to exchange rate flexibility and to continue efforts to strengthen the operational autonomy and governance of the central bank with a perspective of a gradual transition to an inflation targeting regime.

Costa Rica: Exchange Rate Margin Drops 30%

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The movement could respond to the lower volatility of the exchange rate seen from the beggining of administration of Luis Guillermo Solis on May 1st this year.

The margin between buying and selling dollars at the counters of financial institutions has declined from 13 to 10 colones colones in the last eight days, after several weeks of constant central bank interventions in the wholesale forex market, movements which the market interpreted as efforts to stabilize the price of the dollar against the colon and prevent it rising beyond what is deemed appropriate by the authorities at the Central Bank.

Guatemala: Banguat Authorized to Sell More Dollars

October 2009

Banguat is now authorized to sell up to $32 million a day; previously, it could offer only 24.

The measure, approved by the Monetary Board (Junta Monetaria), intends to give Banguat, the Central Bank of Guatemala, greater flexibility to control the depreciation of the Quetzal versus the Dollar.

Pressure Against the Quetzal Continues

March 2009

The Banguat continued its intervention in the foreign exchange market by selling $34.9 million to stop the devaluation of the Quetzal.

Pressures against the quetzal could be a product of the decision taken in December by the Monetary Board and the Bank of Guatemala to loosen the rules of participation and the reduction in bank reserves which generated greater liquidity in the local currency that was channeled toward purchasing foreign currency, according to some analysts.

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