A new annual 0% devaluation of the Cordoba against the dollar comes into force in Nicaragua.
This Monday, Nicaragua announced a new rate of devaluation of the Nicaraguan Córdoba against the US dollar, set at 0% per year, which, according to independent economists, will benefit the state and could harm workers with dollar salaries, families who receive cash translations and exporters.
Cordoba’s depreciation against the dollar fell to 0% per annum after remaining at 1% per annum since 1 February 2023.
According to the Central Bank of Nicaragua, from January 1 to December 31, 2024, the official exchange rate will be 36.6243 Córdoba (national currency) per US dollar.
According to independent economists such as Enrique Saenz, slowing the rate of depreciation of Cordoba against the dollar benefits the state more than Nicaraguans, especially if inflation does not stabilize.
The state-owned issuing bank announced last August that its board of directors had decided to establish a sliding rate of the Cordoba exchange rate against the US dollar from 1% to 0% per annum from January 1, 2024.
The monetary authority explained at the time that the decision was made four months in advance “to ensure greater predictability of the exchange rate, as well as to facilitate government budgeting, monetary programming of the Central Bank of Nicaragua and business planning.”
Gradual reduction from 5%
This is the fourth time in less than five years that the central bank has reduced the rate of slide of Cordoba’s exchange rate against the dollar.
In 2019, it decreased from 5% to 3%, from December 1, 2020 – from 3% to 2% per annum, and from February 1 to December 31, 2023 – from 1% to 0%.
Since 2004, the Central Bank has maintained a sliding exchange rate against the dollar at an annual adjustment of 5%.
The monetary department noted that this measure was taken within the framework of macroeconomic policy and relevant macro-financial indicators.
Moreover, he stressed, “because the recent economic evolution presents the following results: growth in economic activity, consolidation of public finances, a financed balance of payments, a stable financial system, growing international reserves, and monetary and exchange rate stability.”
The Central Bank hopes that “against these favorable conditions, a reduction in slippage will help strengthen the national currency and offset the impact of high international inflation on the national economy, thereby benefiting the purchasing power of the population. “.
Nicaragua’s gross domestic product (GDP) grew 3.8% in 2022, the second consecutive year of growth (10.3% in 2021) after 3 consecutive years of closing in the red, with inflation at 11.59%, according to official data. .
For 2023, the Central Bank forecasts economic growth at a minimum of 4% and a maximum of 5%, with inflation ranging from 4.5% to 5.5%. EFE