Costa Rica: Increase in Credit Interest Rates in Dollars

In the case of mortgages, the interest rate applied by state banks rose from 9.43% in November to 9.84% in January and the rate applied by private institutions moved from 8.32% to 8.68% in the same period.

"For other activities, including consumer credit, the percentage rose from 9.92% to 10.29% in the state banks, and from 9.32% to 10.14% in private ones.

Both the Central Bank and bankers consulted agree that the increase is a reflection of the decreased amount of dollars that banks have to lend", reports Nacion.com

Source: Nacion.com

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High interest rates in colones and the dollar’s loss of value the against the colon accounts for the de-dollarization of Costa Rican’s savings.

The tendency to save in dollars that prevailed in the country for years is slowly disappearing, driven by the sharp devaluation of the U.S. currency which in recent months has not moved away from the lower band limit of 500 colones per dollar .

Cheap Dollar in Costa Rica

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The U.S. Dollar has been losing its value, pushed down by unattractive interest rates and lack of investment alternatives.

In the Costa Rican foreign currency exchange, the dollar has been hovering close to its minimum allowed level of 500 colones for the past few months. This is explained by the lack of attractive investment options in this currency, low interest rates and the constant intervention by the Central Bank in the forex market.

Costa Rica: Consumer and industrial credit rates grow the most

August 2008

Interest rates in colones offered by State banks for consumer, livestock and industrial loans are the rates that have gone up the most in the last four months.

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