Considering the main internal and external variables stable, the Bank of Guatemala is keeping the leading policy rate, a major reference for interest rates in the country, unchanged.
The Bank of Guatemala has lowered the leading policy rate, the reference for interest rates in the domestic financial system, from 5% to 4.75%.
The Monetary Board decided to lower the leading policy rate by 0.25 percentage points based on the external and internal economy, seeing a recovery in global economic activity.
Appreciation of the quetzal against the dollar has affected the income of exporters who are asking the monetary authority to stop overvaluation of the local currency.
The President of the Guatemalan Association of Exporters (Agexport) reported that the strength of the quetzal is causing products in the country to be more expensive and therefore a change in monetary policy is needed.
The Bank of Guatemala is maintaining at 5% the leading policy rate, the reference for interest rates in the domestic financial system.
The Monetary Board has decided to keep the leading monetary policy interest rate at 5%, based on a comprehensive analysis of the external and domestic economic situations.
After having increased in April by 0.25%, the Monetary Board of the Bank of Guatemala decided to keep the leading rate at 5.25%, with an eye on inflation control.
From a press release by the Bank of Guatemala (Banguat):
The Monetary Board in its meeting today, decided to keep the level of 5.25% for the monetary policy leading interest rate, based on comprehensive analysis of the external and internal situation, after being made aware of the Balance of Inflation Risks.
The recent increase in the value of the Costa Rican colon versus the dollar is worrisome, not only because there are no clear reasons to explain it, but also because it would be hard to contain it without causing greater problems.
In the past weeks, and without apparent reason, the price of the U.S. dollar in Costa Rica dropped considerably.
Fitch Ratings warned that although Central American sovereigns have resisted the global crisis pretty well so far, they now require fiscal consolidation in order to maintain their credit ratings.
Summary
Fitch‐rated Central American sovereigns have thus far withstood the destabilizing effects of the global economic and financial crisis, despite monetary and exchange rate policy challenges. 1 Nevertheless, weaker public finances could lead to negative rating actions if fiscal consolidation is not achieved over the medium term.
Although recent public opinion has focused on what went wrong with securitization, it is important to recognize the many benefits associated with sound securitization.
Global Financial Stability Report (GFSR), October 2009 - Chapter 2
Key points:
Sound securitization provides important benefits—to allocate credit more efficiently, transfer credit risk away from banking sector to more diversified investors, and more finely tailor risks and returns to potential end investors.
Demand for $363 million in Treasury Bonds has been such that in two sessions $243 million have been sold.
$42.5 million were issued in 3 year bonds, paying 7.2%, whereas $9.7 million were sold in 5 year bonds, paying 7.9%. The bulk was $141 million in 11 year securities, which pay 9%.
In the first day of the public offering the market demanded $220 million, with $50 million sold after analysis.
18% was bought by public entities and the remaining 82% by private investors.
"As tender offers were too high, we didn't closed deals through that channel. We closed them through bidding and the Stock Exchange", said Luis Alejandro Alejos, from the Finance Ministry.
The Central Bank of Guatemala (Banguat) increased its international reserves with the approval of Special Wire Rights by the IMF.
Julio Suárez, vice president of the Banguat, said that "currently these funds are part of our international monetary reserves, and if the need arises, they can be used".
The Finance Ministry presented the issue plan to bankers and investors.
Starting September 1st, public auctions will be carried out in the Stock Exchange, in which state companies, banks and private investors will participate.
According to projections for 2009 by Banguat, lines of credit from abroad could fall to $50 million.
Sigloxxi.com reports on its webpage: "The Central Bank indicates that in 2008 correspondent banks made $188.2 million (Q1,411.5 million) available to the national banking system, however this year it could be only $50.0 million (Q375.0 million), a reduction of 73.6%.
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