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Costa Rica Sees Surge in US Dollar Loans

Article Summary:

The demand for loans in the form of US Dollars is booming in Costa Rica. Fueled by low loan rates in dollars, the appreciation of the colon and low inflation rates, Costa Rica is experiencing sufficient amount of the US dollar in the loan market.

Photo Credit: El Economista

Original Article Text From El Economista via Google Translate :

Costa Rica: Credit Rises and Falls in Dollar Savings in that Currency

The Costa Rican market is experiencing a boom in demand for loans in dollars, however, the savings rate in that currency is down. According to Nación.com the site notes that in the foreign currency loans in the banking system went from representing a 44% of the total loans in October 2010 to 46% in October 2011.

For their part, the financial system deposits in dollars spent is almost 37% of the total in October 2010, to 34% in October 2011, according to the November monthly report to Central Bank of Costa Rica.

The changes in the market are powered by low rates in dollars, the appreciation of the colon and low inflation, increase these trends, according to bankers polled by the newspaper.

Currently, the average rate offered by a state bank by a deposit in dollars to 30 days is just 0.41%. “These behaviors, in my opinion, are but the trend resulting from exchange rate to appreciate the colon. This makes borrowing cheaper dollars or colones for more expensive, because apart from the interest rate in colones must be added an appreciation of the colon, which makes comparing the APR for a credit in dollars with a credit in colones do more attractive dollar financing, “said Gerardo Corrales, manager of BAC San José.

According to Corrales, in recent weeks have seen a surge in the dollar placement at such a level that there is now sufficient liquidity in the market in that currency, which portends rising interest rates for loans in dollars in the coming days.

Arnoldo Trejos Dobles, Bancrédito deputy general manager, said that in general the consumer observes a tendency for the exchange rate is stable or tends to down. This makes the dollar interest rates were lower than those of the Colon.

Link to Original Article:

From El Economista

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