Central Bank Intervenes Quetzal

In a new attempt to minimize the downward trend registered in the price of the local currency against the dollar, Banco de Guatemala will intervene in the exchange market buying $500 million.

Friday, January 19, 2018

The exchange rate of the Quetzal with respect to the US Dollar has trended downwards since January 2010, when the Quetzal was quoted at Q8.40, falling to Q7.34, according to the latest record available in January 2018. The new measure that is being implemented from today, involves carrying out auctions on the foreign exchange market every Friday, of $50 million each, until a total amount of $500 million has been spent.   

See "Guatemala: Price of the dollar continues to fall"

Sergio Recinos, president of the Bank of Guatemala explained to Elperiodico.com.gt that " ..." The aim is to collect an excess of foreign currency that has been detected in the economy and left over from last year, so that this amount can be sterilized, which is approximately US $500 million, and new incomes are can enter the market so that the exchange rate will only respond to these new flows'."

Regarding the actions to be implemented by the monetary authority, Carlos González, consultant at the Association of Research and Social Studies, said that " ... it is time for the bank to act more actively in recovering the exchange rate because of the damage it is doing to tourism, to exports, and to remittances. This is the right decision, because the intention is to reduce the excess of liquidity that there is'. "

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More on this topic

Quetzal vs. Dollars: Has the Trend Reversed?

September 2018

Since the beginning of the year Banco de Guatemala has intervened in the foreign exchange market buying foreign currency in order to curb appreciation of the local currency against the dollar, but in recent weeks it has been selling currencies in order to minimize depreciation.

In recent weeks the exchange rate of the Quetzal against the US dollar has been trending upwards, which has forced the Bank of Guatemala (Banguat) to sell foreign currency in the foreign exchange market. So far this year, up until September 24, it has had to intervene selling $402 million worth of foreign currency.

Guatemala and the Exchange Rate Intervention

March 2018

So far this year the Banco de Guatemala has intervened in the foreign exchange market buying $282 million, less than the $320 million bought in the same period in 2017.

As announced by the Central Bank authorities at the beginning of the year, the institution continues to implement actions to reduce the downward trend registered in the price of the local currency with respect to the Dollar. In January 2010 the Quetzal was quoted at Q8.40 for each dollar, and in January 2018 this figure reached Q7.34.

Guatemala: Dollar Price Continues to Fall

July 2017

An oversupply of dollars generated mainly by a growing flow of remittances has forced the Central Bank to intervene by buying $160 million in the wholesale market in only four days.

Intervention on the part of the Bank of Guatemala has intensified in recent weeks, due to growth in the supply of dollars in the country, which has maintained an upward trend since the beginning of the year. 

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.

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