The Lempira Depreciates

The devaluation that the Honduran currency has suffered against the dollar for several days, has the population concerned, because it increases the cost of living, reducing purchasing power in a country highly dependent on imports.

In late July the Central Bank of Honduras (BCH in Spanish) revived the system of bands, a scheme under which the dollar fluctuates between two bands, established by the entity that has the power to buy dollars if the exchange rate reaches the lower band, and sell if it is located at the upper limit, thus increasing supply and pushing the exchange rate down.

Mid-week the dollar was trading around 18.99 lempiras.

An articlce in Elheraldo.hn states: "As per warnings from several sectors, the management of BCH, the president Maria Elena Mondragon has bowed to IMF pressure to devalue the lempira."

Source: elheraldo.hn

More on this topic

Honduras: Further Devaluation of Lempira?

February 2012

Yielding to old pressures, the government of Porfirio Lobo may have made a commitment with the IMF to devalue the lempira by 5% in 2012.

The lempira could depreciate by 95 cents this year, the biggest jump seen since 2005, and that change may have been agreed on in recent negotiations with the IMF in Tegucigalpa.

Honduras will avoid IMF pressure to devalue the Lempira.

December 2008

According to the president of the BCH, Edwin Arague, the economic sector of the country will not negotiate any stand by agreement with the IMF since the entity is pressuring them to devalue the local currency.

Araque said that there are no conditions in Honduras to devalue the lempira, since, from a financial point of view, the economic has remained stable and so the measure proposed by the IMF will not be executed, he said.

Honduras: Lempira variations do not affect savings

July 2008

Honduras continue saving in Lempiras in spite of the fluctuation of the currency versus the US dollar.

The Central Bank of Honduras reported that the banking system keeps $6.180 million in private sector deposits, with 30% of those in Lempiras, and the remaining 30% in foreign currency (US dollars, euros, swiss francs, pounds and yens). The data refers to July 3, 2008.

Honduras: Lempira Exchange Rate Band Change

July 2011

The Central Bank of Honduras has reinstated upper and lower limits for foreign exchange auctions, which will be held Monday through Friday.

A statement by Central Bank of Honduras reads:

Faced with a favorable external position BCH has decided to reactivate the exchange rate band.