The economic environment in 2018 was defined by a context of fiscal uncertainty, economic slowdown and greater financial volatility, together with a difficult external environment.
Regarding the fiscal uncertainty occupying a large part of last year's economic agenda, explains the Central Bank of Costa Rica (BCCR) which was originated, firstly, in the electoral process that lasted until April, and later in the difficulties faced to achieve an agreement that would help restore the sustainability of public finances in the medium term.
The volume of operations totaled $3.439 billion during the second quarter of the year, registering an increase of 12% with respect to the same period in 2017.
The Central Bank of Nicaragua (BCN) reported that the operations of financial and exchange entities with the public totaled US $3.0542 billion, reflecting a year-on-year increase of 2.1%.In relation to the operations of the Government, banks and financial institutions with the BCN, through the Exchange Desk, they totaled 384.5 million dollars (US $71.9 million in the II quarter of 2017).
The volume of operations in the foreign exchange market totaled $1.166 billion in February 2018, registering an increase of 15% with respect to the same month in 2017.
From a statement issued by the Central Bank of Nicaragua:
March 28, 2018.The volume of operations in the exchange market totaled 1.1662 billion dollars in the month of February (purchases: US $584.8 million and sales US $581.4 million), with a daily average of 48.6 million dollars.
Three weeks ahead of the ballotage in Costa Rica, exporters are demanding more flexibility from the candidates, modernization of the port of Caldera and better security controls at ports and on roads.
One of the issues that has most affected the flow of international trade in Costa Rica in recent years has been the security of exports and how these have been damaged by theft and constant interception of containers.This is one of the issues which exporters are demanding more attention be paid to by the government that will take office on May 1.
The volume of operations totaled $3.377 billion in the last quarter of last year, registering an increase of 1% compared to the same period in 2016.
In the last three months of 2017, operations made by financial and exchange entities with the public totaled $3.315 billion, reflecting an interannual increase of 3%.Operations by the Government, banks and financial institutions with the Central Bank, through the Exchange Desk, totaled $62 million.
The volume of operations in the exchange market totaled $973 million in July 2017, a decrease of 6% compared to the same month in 2016.
From a statement issued by the Central Bank:
The Central Bank of Nicaragua (BCN) published on September 1, 2017 the Statistical Report on the Exchange Market, corresponding to July of this year.
The volume of operations in the foreign exchange market totaled 972.6 million dollars (purchases: US $497.6 and sales US $475.0 million) during the month of July 2017 (daily average of US $38.9 million), showing a decrease of 6.0 percent, in relation to the same month of the previous year. This behavior was explained by a reduction in the volume of operations made by the BCN exchange desk with banks and financial institutions, followed by exchange offices with the public.
In one day the Central Bank sold $30 million on the wholesale foreign exchange market in order to moderate the upward trend that had been seen in the price of the dollar against the Colon.
The transaction was made in order to prevent sharp fluctuations in the exchange rate, which since the beginning of the year has shown an upward trend in the wholesale Monex market.On Thursday, March 23, alone the Central bank sold $30.9 million, the highest figure of the year.
In Costa Rica several banks expressed their disagreement with the new standard which will prevent them from deciding how much of their capital will be denominated in dollars and how much in colones.
In an attempt to gain more control of the risk involved in foreign exchange transactions by banks and their impact on the exchange rate, the Central Bank has changed therules for foreign exchange cash operations, forcing banks to change the composition of their assets so that the proportion denominated in dollars is equal to the proportion of assets in that currency.
Starting December 22nd 2016 a new rule applies that prevents banks in Costa Rica from deciding how much of their capital they want to hold denominated in dollars and how much in colones.
In an attempt to gain more control of the risk involved in foreign exchange transactions by banks and their impact on the exchange rate, the Central Bank has changed the rules for foreign exchange cash operations, forcing banks to change the composition of their assets so that the proportion denominated in dollars is equal to the proportion of assets in that currency.
In September an intervention was made in the exchange market through the sale of $81 million in order to avoid upward pressure on the exchange rate.
The $81 million that the Central Bank sold on the wholesale market to try to minimize upward pressure on the exchange rate is almost half of the amount it has injected so far this year.
Moody's warns of the risks faced by banks in Central America in the context of a rising trend in interest rates and dollarization of their loan portfolios.
From a report by Moody's:
Mexico, September 14, 2016 -- Banks in Central America face rising asset risks as interest rates look set to rise in the region, pushing up debt service costs for borrowers, according to a report from Moody's Investors Service.
The Central Bank is not ruling out intervening in the exchange market when it considers that the movement of the dollar against the Colon could jeopardize keeping inflation under control.
At a time when exporting companies insist on giving more flexibility to the exchange rate in order to favor a devaluation to improve their competitiveness abroad, the central bank is standing firm in its position to intervene in the exchange rate when necessary to maintain stable inflation.
If the measures which the Central Bank plans to implement come to fruition, banks will have to seek authorization from the entity in order to borrow abroad in dollars.
This measure would be in addition to the latest implemented by the Central Bank, raising reserve requirements to 15% on new business loans from abroad.In June this year the increase in the loan portfolio in dollars compared to the same month of 2015 was 14%.
New regulations are being prepared for measuring currency risk for banks, whose loan portfolio in dollars grew by almost 13% in one year, while 78% of those who borrow in dollars receive their income in local currency.
Figures from the General Superintendent of Financial Institutions (SUGEF) indicate that 41% of the principal balance of outstanding loans is denominated in foreign currency and the rest in colones.Added to this it is the fact that 78% of borrowers of these loans in dollars earn their money in colones.
The Financial Superintendency plans to increase reserve requirements for banks that lend in dollars to companies that do not generate revenue in that currency.
As a measure to prevent the growth of dollar loans to individuals and companies that do not generate income in this currency, the Superintendent of Financial Institutions (SUGEF) said it plans to raise reserve requirements for financial institutions and banks in order to address payments in arrears by debtors. Currently the requirement is 0.5% of the balance due.
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