This week the basic borrowing rate, which reflects the average deposit rates paid by banks on periods of 150 to 210 days, was adjusted upward, to 7.25%.
According to economic analysts, the increase comes at a time when banks are demanding more colones to grant loans and the Central Bank is maintaining strict control of liquidity, in order to keep inflation within the parameters established by the entity.
According to an article in Prensalibre.cr: "The July inflation expectations increased from 6.6% to 6.8% as shown in the latest survey by the BCCR, which also shows that agents continue to expect a devaluation of 4.4 % for the next twelve months, so that from an average Monex of ¢ 505.5 it would be approaching ¢ 527.7
Under these expectations and with an average interest rate of 1.4% for investors in dollars at 6 month terms, the reward for investing in colones would be staying at around 1.45%."
Source: prensalibre.co.cr
More on this topic
May 2011
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 .
March 2011
In January 2011, indebtedness in Colones was 59% of total loans, compared to less than 50% in 2009.
The low Dollar value and relatively low rates in Colones encourage borrowing in national currency.
Gerardo Corrales, manager of BAC San José, told Nacion.com, "... the decision to take a debt in Colones or Dollars, besides interest rates depends on customer expectations of devaluation or appreciation of a currency against the other."
January 2009
As of today, the basic passive interest rate dropped by a quarter point, from 11.5% to 11.25%.
Nacion.com reports: "The basic passive rate was reduced for the second consecutive week this month.
The basic passive rate is calculated by the Central Bank and is a weighted average of the interest rates for savings in colones for terms of between 150 days (5 months) and 210 days (7 months)."
October 2008
After 12 consecutive increases since May, there was a reduction of 0.25% this week; the basic rate fell to 10%.
The basic passive rate is an average of the interest rates for savings in colones for terms of 150 days (5 months) and 210 days (7 months). It is used as a reference for loans.
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