Savings in Colón Versus
Dollar On the Increase
The declining US dollar
is forcing many in Costa
Rica to save and borrow
in colones rather in
dollars, an apparent
trend over the last
three months.
Today, for every ¢100
colones that is saved,
¢56 is deposited in a
colones account to only
¢44 colones to a dollar
account. A year ago the
ration was 50/50, while
before 2006 the ratio
was 55% of the deposits
were in dollars.
At the same time,
currently, for every 10
loans, five are in
colones. Prior to that,
60% of all loans were in
dollars, according to
figures released by the
Banco Central de Costa
Rica (BCCR) - Costa
Rican central bank.
The lower interest rates
and strong competition
between the financial
institutions have
influenced many to make
adjustments to their
savings and loans.
For example, interest
rate on real estate
loans went from an
average 20% annually to
the current 9%. In
addition, banks over the
last several years have
been promoting loans in
colones.
Francisco de Paula
Gutiérrez, president of
the Banco Central, said
that appreciation of the
colón against the US
dollar has "revived"
investor expectations
for the colón.
The BCCR says that
deposits in colones is
up 27% in the last year,
while savings in dollars
only grew 6%.
The biggest change came
last November when the
BCCR re-evaluate the
exchange rate by 4%,
taking the exchange rate
of the colón to the U.S.
dollar from ¢520 colones
to ¢500.
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