In a competitive scenario for lower costs and higher productivity, devaluation against the Lempira Dollar in Honduras and the Cordoba Dollar in Nicaragua is a factor that could help these economies stay competitive.
In the last five years, the exchange rate in Honduras increased by 17%, from 21.06 Lempiras per U.S. dollar in June 2014 to 24.67 in the same month in 2019.
In an unstable exchange market, lack of transparency in the rules on intervention by the Central Bank of Costa Rica increases uncertainty and drives investors towards the safest currency.
EDITORIAL
The rise in the price of the dollar in Costa Rica is a negative factor for some sectors and positive for others, but generally negative for the economy, because it distorts companies' plans, diminishing their competitiveness, and because it increases market players' willingness to speculate.
One dollar in Mexico now costs over 16 pesos, having accumulated 9.5% depreciation since the beginning of 2015 and 23% since October 2014.
The importance of Mexico as a destination for exports from the Central American countries necessitates keeping an eye on the spread of exchange rate competitiveness of the respective economies.
Some companies can become richer than others overnight, depending on decisions made by a few public officials.
Editorial
An article in Elfinancierocr.com reports on the positive effects of the devaluation of the national currency of Costa Rica, the-Colón, agains the dollar, for exporters in the country.
In the next two years, the RMB or Chinese yuan could become one of the major currencies used in global trade.
This was said in London by Douglas Flint, chairman of HSBC Holdings SA, adding that "the renminbi (RMB) will be a growing part of normal business in the everyday life for anyone who trades or invests in China."
Macroeconomic instability and lack of certainty over the variables that affect the production and marketing of goods and services, make it crucial to have excellent cost control.
An analysis on the subject is provided by Otto Stecher, Director of Business Outsourcing Services at Deloitte, detailing the particular situation of Costa Rica's economy and its impact on business, which can be extrapolated to any company in the region.
An Argentine expert predicts that if the Salvadoran economy abandons the dollar it would trigger serious social upheaval ... and Argentines know all about that...
An article in Elsalvador.com by Eduardo Levy Yeyati, former official of the International Monetary Fund (IMF) and the World Bank, and "who has conducted research on the causes and consequences of dollarization, the behavior of markets in times of crisis and of monetary and exchange rate regimes, said a freeze on bank withdrawals in the country would be accompanied by a pronounced economic downturn, which would be associated with an imbalance in the payment system, ie, lack of liquidity. "
Central America may be directly impacted by the slowdown in the recovery of the world economy.
For the time being, the region's measures of external and internal demand do not seem affected by the threat of lower growth rates for the economies of partner developed countries.
Good news for importers and store owners, bad news for exporters. Governments cannot afford to ignore this problem.
The causes of the appreciation in the value of Latin American currencies relative to the United States dollar are varied. The main reason is the current weakness of the US economy and the low expectations of a quick recovery.
Inflation deceleration and Risks to economic recovery.
The quarterly report from the Executive Secretary of the Central American Monetary Council (SECMCA) focuses on the region's inflation and recovery prospects.
Inflation, measured by year-on-year change in consumer prices, slowed in the second quarter of 2010 to 4.9%, compared to 2.9% in June 2009.
Central American countries still need to improve their economic performance to reach investment grade ratings.
On its Quarterly Country Risk report for June 2010, the Central American Monetary Council (SECMCA), notes that Moody’s Investor Service improved the foreign currency risk ratings for Guatemala and Nicaragua.
Oscar E. Mendizábal, editor of the Blog “Desde Guate” (From Guatemala), gathers and analyses the main factors influencing the Central American economy (except Panama) during the first six months of this year.
In El Salvador, the debate over the advantages and disadvantages of dollarization has been reignited, as the government is in need of resources for funding its programs.
President Funes has regretted that Dollarization has limited El Salvador from taking actions to combat the economic crisis.
After showing constant growth during 2007 and 2008, inflation indexes slowed down considerably in the second half of 2009.
The Executive Secretary of the Central American Monetary Council presented its 30th Regional Economic Update. In it, they calculate how much inflation was indirectly imported by the Central American countries.
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