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    During the previous year, credit to the private sector presented an annual growth rate of 14.5%, according to analysts, foreign currency loans were most desired due to the stability in the interest rate and the exchange rate of the currency.

    The resources that banks seek overseas where rates are historically low, in order to lend locally dollars said the Central Bank of Costa Rica (BCCR,. A situation that occurred during the previous year, was that the dollar liquidity was around 4.5%, this means that some entities in that currency used more resources from abroad.

    Given the dynamism of credit in dollars, it is expected that for 2013, the credit will be stable and so will currency and exchange rates.

    One economist and researcher at the University of Costa Rica, said that if interest rates fall in colones the trend could be reversed, however local currency yields are still high so traders maintain their preference for foreign currency borrowing.

    “I think the trend will reverse, while the interest rate in colones not less than 8% credit trend will continue as before,” said the economist.

    In recent days last year the exchange rate showed a slight upward trend, capital inflows, due to factors such as foreign investment and speculative capital Eurobonds, causing the exchange rate to remain stuck at the lower level therefore driven people to borrow in dollars.

    As for a possible upward exchange rate resulting in a hazard for those who opt for a loan, this situation is far away.

    For the analyst’s, it is important that financial institutions adequately assess their risk, since in the short term there would be risks, but in the long run especially if people assume other debts.

    Overall in 2012, the foreign currency lending increased in the order of 17.8%, while the national currency was 12.3%, for an annual growth rate of 14.5% in private sector credit.

    The Costa Rica News (TCRN)
    San Jose Costa Rica

    Private sector, exchange, costa rica, costa rica news

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