The Central Bank of Costa Rica informed that on November 12th, it made auction Monetary Stabilization Bonds in Colones, for an amount equivalent to $8 million, at a gross interest rate of 9.51%.
From the statement of the Central Bank of Costa Rica:
The Central Bank of Costa Rica announces to the national market that it will hold an auction of Monetary Stabilization Bonds next Monday, November 12th, 2018, and that in this event it will make available to the public the following standardized series, the features of which are detailed below:
Because of the adjustments made by the Central Bank to interest rates in recent days, financial institutions in Costa Rica will be forced to raise interest rates on savings in local currency.
Arguing that forecasts suggest that inflation in 2019 could be above the upper limit of the target range, on November 1st the Central Bank of Costa Rica (BCCR) decided to raise the monetary policy rate from 5% to 5.25%.
The Basic Passive Rate decreased from 5.80% to 5.65%, while the Effective Rate in Dollars also decreased, from 2.46% to 2.34%.
The Central Bank of Costa Rica published on Wednesday afternoon November 7th that after not registering a change the previous week, the Basic Passive Rate fell 0.15%, and will be kept at 5.65% until next November 14th. [GRAFICA caption="Click to interact with graphic"]
From July 2017 to September 2018, the percentage of loans in dollars with payment arrears over 90 days or in legal collection increased from 1.57% to 2.95%.
The default on dollar loans is still under 3%, which is still considered normal. However, according to the trend reported in recent months in the records of the General Superintendence of Financial Entities (Sugef), the indicator is likely to exceed the 3% barrier.
The exchange rate began in November by recording ¢621 in the windows of some banks and ¢617 in the Monex wholesale market.
In accordance with reports since mid-August, the upward trend of the exchange rate in Costa Rica is not slowing down. According to data from the Central Bank, between August 16th and November 1st in the wholesale market Monex, the Colon has registered a depreciation in relation to the U.S.
The Effective Rate in Dollars increased from 2.33% to 2.46%, while the Passive Basic Rate remained at 5.80% for the second consecutive week.
On Wednesday afternoon, October 31st, the Central Bank of Costa Rica published that after the 0.05% increase of two weeks ago, the Basic Passive Rate did not change and will remain at 5.80% until next Wednesday, November 7th. [GRAFICA caption="Click to interact with the graph"]
In Costa Rica, the currency depreciation persists, with the exchange rate reaching ¢616 in the windows of some banks and ¢610 in the Monex wholesale market.
The increasing trend of the exchange rate in Costa Rica is not stopping. According to data from the Central Bank, between September 27 and October 30 in the wholesale market Monex the Colon has registered a considerable devaluation against the U.S.
The Basic Passive Rate increased from 5.75% to 5.80%, while the Effective Interest Rate in Dollars increased from 2.21% to 2.33%.
The Central Bank of Costa Rica announced today that after recording a decline last week, the Basic Passive Rate increased 0.05%, and the level at which it will remain until next Wednesday, October 31 is 5.80%. [GRAFICA caption="Click to interact with graphic"]
The Passive Basic Rate decreased from 5.80% to 5.75%, while the Effective Rate in Dollars also decreased, from 2.43% to 2.21%.
On Wednesday afternoon, October 18th, the Central Bank of Costa Rica published that after not recording a movement in the previous week, the Basic Passive Rate decreased by 0.05%, and will remain at 5.75% until next Wednesday, October 25th. [GRAFICA caption="Click to interact with the graph"]
In Costa Rica a law proposal pretends to reduce by 50% the bank fees on loans for businesses and SMEs, as well as credits for social housing and lower class.
The law project, which was presented to the Congress by the representative, Yorleny Leon, aims to reduce fees in the formalization of bank loans, which currently range between 8% and 10% of total credit.
During this year, the Central Bank of Costa Rica has had to spend $1.1 billion of its reserves to participate in the exchange market and counteract the upward trend in the dollar price with respect to the Colon.
According to figures from the Central Bank of Costa Rica (BCCR), from August 17 to October 12 the exchange rate in the wholesale market Monex has been increasing, going from ¢568.35 to ¢595.46 per dollar, which is equivalent to a depreciation of 4.76%. [GRAFICA caption="Click to interact with the graph"]
The Costa Rican currency continues to depreciate, and the exchange rate in some Banks was already 600 Colones and more per dollar.
The upward trend of the exchange rate in Costa Rica has been observed in recent days. The Central Bank estimates that between September 27 and October 11, the exchange rate in the wholesale market Monex reported a clear upward trend, which is reflected in the increase from ¢570.75 to ¢597.43 per dollar, equivalent to a depreciation of 4.67%. [GRAFICA caption="Click to interact with graphic"]
The Effective Rate in Dollars increased from 2.40% to 2.43%, while the Basic Passive Rate continued for the second week at 5.8%.
The Central Bank of Costa Rica announced on Wednesday, October 10th that after the 0.10% decrease in the previous week, the Basic Passive Rate did not change and will be stable at 5.80% until next Wednesday, October 17th.
The basic passive rate is an average of the collection rates in Colones of the financial entities in terms of 150 to 210 days.
The exchange rate in the wholesale market Monex reported a clear upward trend during the first four days of the week in Costa Rica, increasing from ¢589.49 to almost ¢600 per dollar.
The Costa Rican currency depreciation against the U.S. dollar has been increasing in recent weeks, mainly due to the uncertainty over the fiscal situation and the greater perception of risk by investors and consumers, even though the tax reform law has already been approved in the first debate. The new law's future depends on the Constitutional Chamber, which must give its approval before being discussed and eventually approved in the second debate. See: "Tax reform: Partial Solution." [GRAFICA caption="Click to interact with the graphic"]
The impact of the strike, the uncertainty of the fiscal situation and the increased risk perception by investors and consumers, explain much of the depreciation that the Colon is suffering against the dollar in Costa Rica.
Figures from the Central Bank of Costa Rica (BCCR) suggest that between September 27th and October 5th the exchange rate in the wholesale market Monex registered a significant upward trend, which is reflected in the increase from ¢570.75 to ¢591.25 per dollar, equivalent to a depreciation of 3.59%.