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    Low Liquidity Pushes Dollar Rate Hike

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    Foreign currency liquidity is growing moderately and showing a tendency for reduced growth. To date, the liquidity in dollars and colones is growing at levels of 12%, however in an increase of 17% in dollars and only 6% was shown.

    Also, the cost of foreign currency loans is increased by the credit restrictions imposed by the Central Bank of Costa Rica, but deposit rates are higher due to lower foreign currency liquidity.

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    Banks have increased their dollar yield between 1% and 1.5% because of dismissal of the loans in this currency. Furthermore, given the orders of the National Financial System Supervision (CONASSIF), entities may only lend to those with income in that currency.

    Given the situation, the economist Mariany Espinoza explained that some financial institutions have increased their deposits abroad for greater liquidity and lower rates due to the international situation where yields show historically low levels.

    Broad money (liquidity and financial wealth), indicators of financial savings of economic agents, also reflected access to financial intermediaries to cheaper external resources.

    International rates that are low, prompted significant capital movements from developed countries to other countries in search of better financial performance, including Costa Rica.

    The increased availability of foreign exchange in 2012 was framed in an international context of abundant liquidity, resulting in expansionary monetary measures implemented by the major developed economies.

    The Costa Rica News (TCRN)
    San Jose Costa Rica

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