Costa Rica: Better to Invest in Short Term

Investment in short-term debt in colones has better performance than the long term.

Monday, July 30, 2012

For investment instruments in colones, such as government bonds, the short and medium term show better yields, while long have tended to decline.
"In dollars, the behavior is different. Experts consulted by El

Financiero reported that the momentum is pointing to a decline in interest in the coming months, therefore in this currency it may be wise to bet on a longer period and thus take advantage of higher levels of interest.

The above points are part of the main recommendations for investment in the remainder of 2012, when thinking about a strategy that follows the calendar year and in December or January next reviewing investment plans. "



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Local Currency Shortage Pushes Interest Rates Up

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In Costa Rica, the government's strong need for financing and the Central Bank's exchange rate interventions have been putting pressure on the local financial market, pushing up passive rates in Colones.

The decrease in liquidity in Colones generated by the pressure exerted by the government and the Central Bank in the local market is the main reason behind the upward trend in passive rates in local currency.

Costa Rica: Higher interest rates in colones expected

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The banking sector indicates that the current shortage of local currency could generate more upward pressure on interest rates in the short term.

From a statement by the Costa Rican Banking Association (ABC):

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Costa Rica: Rise in Bond Yields in Colones

February 2014

Yields on long-term bonds in colones today showed a strong rebound, reflecting expectations of higher interest rates.

Long term debt securities in colones traded in the secondary market had a significant rebound today, an adjustment which, according to the same market, was expected due to the lower U.S. dollar liquidity and the increase in rates in that currency.

Costa Rica: Premium for Savings in Colones Drop

October 2013

During the last twelve months the returns given by state banks to their clients for savings in colones rather than dollars decreased by 2.6 % .

A financial report by the Central Bank of Costa Rica (BCCR) explains that "the data shows that the average differential in savings with a term of six months, closed at 1.46 points in September. But that margin was four points in the same period of 2012 ... ", reported Nacion.com.