By Kelvin Marshall – Del Sur News
Some concerns were raised at the end of last week with the announcement by the Central Bank of Nicaragua (Banco Central de Nicaragua or BCN by its acronym in Spanish) that it had made some changes to the rules governing the rate of commission on the buy/sell of US Dollars (and Euros).
Given the amount of US Dollar transactions in Nicaragua and the fact that about 70% of all bank deposits and 90% of all loans are in U.S. dollars (as well as almost 80% of the economy is effectively dollarized), the country is sensitive to any changes in the system governing exchange rates.
However, it turned out to be a three part notice that did not change the 5% “crawling peg” rate which has been in place since April 30, 1991:
1) The BCN confirmed that they will charge a 1% commission on the buy/sell rate of US Dollars (and Euros), as they have been doing up to now.
2) The President of the BCN (Ovidio Reyes) now has the power to determine the “commission rate” (currently 1%) that the institution will charge for the sale of dollars and euros. Until this amendment, it was the Board of Directors of the BCN that would have made that decision.
3) The BCN will publish the Official Exchange Rate of the Córdoba with respect to the United States dollar for each month, in the second half of the previous month.
The above amendments to the Ley Orgánica del Banco Central No. 732 have been posted in the official government notices “La Gaceta No. 163 of August 24th, 2018”.
This Monday, Ovidio Reyes confirmed in person that:
the currency of our country has not been devalued and there have been no changes in the policy of the sliding exchange rate of 5%.
He also confirmed that Nicaragua has sufficient reserves to deal with the monetary base and to support public deposits. The BCN has also published a clarification on their web site.