Guatemala: Greater Margin for Exchange Rate Flotation

With the increase in exchange rate participation going from 0.65% to 0.70% the central bank will have more flexibility to intervene in the market.

Monday, January 6, 2014

The amendment means that the range within which the Central Bank of Guatemala may intervene by buying or selling dollars in the foreign exchange market will be larger, allowing for greater exchange rate volatility.

The stability exhibited by the exchange rate during 2013 partly explains the decision taken by the monetary authorities.

An article in Elperiodico.com.gt reports: "According to economist Mariano Rayo, with this decision the threshold for the participation of the Central Bank in the foreign exchange market rises."The stability of the exchange rate has been noted and more latitude has been given for intervention in the market," he said. "

The expert added that "with this decision, the export sector could be more competitive related to the exchange rate."



More on this topic

Costa Rica Formalizes Managed Floatation of Dollar

February 2015

The Central Bank of Costa Rica has officially eliminated the exchange rate band which has been in place since 2006, and let the exchange rate float, reserving the right to "participate in the market to prevent violent fluctuations".

From a statement issued by the Central Bank of Costa Rica (BCCR):

Costa Rica: Farewell to Exchange Rate Bands

August 2014

"The exchange rate bands are completely irrelevant for making economic decisions and the formation of expectations among economic agents."

From 'Pulso Bursátil', a blog by Aldesa:

Costa Rica: Facing a Managed Float?

The volatility of the exchange rate (measured by the standard deviation of 15 days MONEX) is at the lowest level of the year and similar to the levels recorded in December 2013, when the exchange rate was quoted at the "floor" exchange rate bands.

BCCR Could Intervene More in Currency Market

June 2010

The new head of the Central Bank of Costa Rica (BCCR), announced he is pondering the possibility of intervening between the currency bands.

Rodrigo Bolaños, new head of the BCCR, explained that the measure will seek to eliminate abrupt variations in the currency exchange rate.

From Currency Bands to Floating Currency

June 2010

In its Inflation Report for May 2010, the Central Bank of Costa Rica announced the gradual shift from the existing current currency bands system to a flotation regime.

The report remarks that “one of the preconditions to move towards an inflationary targets system is the existence of a flexible way to determine the exchange rate, allowing the bank to focus its monetary policy on reaching said inflation targets, without worrying for exchange rate pressures”.

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