Tuesday 21 September 2021

Savers Inclined To Save In Dollars

Dollar savings are preferred both in savings accounts and in term deposits. Also, the dollar assets of investment funds grow much more than in colones.

Paying the bills

Latest

107 people died from covid-19 in Costa Rica in the last three days

QCOSTARICA - In the last three days, 107 people...

Mu variant of coronavirus: what we know about this mutation present in Costa Rica

QCOSTARICA - All viruses change over time. SARS-CoV-2 has...

Constitutional Court confirms constitutionality of mandatory vaccination

QCOSTARICA - Costa Rica's Constitutional Court or Sala IV...

Costa Rica worsens its international image as a place to do business

QCOSTARICA - Our country, Costa Rica, worsens in how...

U.S. to relax travel restrictions for vaccinated foreign air travelers in November

(Reuters) - The United States will reopen in November...

Today’s Vehicle Restriction September 21: Plates ending in “3 & 4” CANNOT circulate

QCOSTARICA - For today, Tuesday, September 21, vehicles with...
Paying the bills

Share

Savers in Costa Rica maintain a preference for saving their money in dollars, above doing so in colones, the national currency.

Dollar savings are preferred both in savings accounts and in term deposits. Also, the dollar assets of investment funds grow much more than in colones. Photo: Mayela López

Saving in colones has not only become less attractive but also stopped growing. According to Banco Central, the inclination towards foreign currency (dollars) is reproduced in savings accounts, term deposits and even in investment funds.

- Advertisement -

The economic slowdown in production in Costa Rica and the distrust of how the economy will evolve as well as the fiscal situation, among other reasons, lead many to think that it is better to invest in a stronger currency, such as the dollar.

The trend, says the Central Bank is that while the balance of savings in foreign currency grows, it stagnates and even contracts in colones.

Last September, dollar accounts grew 5.2% year-on-year, but in colones, they remained stagnant.

This behavior is replicated in the stock market. The assets of the investment funds in dollars, grew 10.3%, and the counterpart in national currency contracted, after showing better results in 2018.

What is behind this behavior of the saver?

The higher interest rates offered by the Government in dollars, in the issues it makes, are part of the explanation, according to the Central Bank.

- Advertisement -

There is a preference for savings in dollars, especially in the broader aggregate of total financial wealth, due, among other factors, to the higher interest rates offered by the Government in the local stock market, cites the Central Bank’s Monthly Economic Summary Report for September 2019.

Therefore, there are also interesting advantages of saving in dollars, explained José Luis Arce, director of FCS Capital.

Monetary aggregates (liquidity in its different forms, that is, cash in circulation, more liquid liabilities in financial institutions, and wealth) show a slowdown as a whole, but by detailing the behavior by currency, dollars accelerate the step and colones decrease.

Financial wealth in dollars went from representing 30.5% in September 2016 to 35.3% in the same month of 2019.

- Advertisement -

On the other hand, there is the distrust that consumers still feel in the local economy, to the extent that the country’s fiscal profile and economic outlook has deteriorated, people favor saving in dollars, said economist Adriana Rodríguez.

 

- Advertisement -
Paying the bills
Ricohttp://www.theqmedia.com
"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

Related Articles

“There can be no divorce between economy and health”

QCOSTARICA - Following is an opinion piece by Dr. Rodolfo Hernández...

Political crisis and pandemic lead Nicaragua to three straight years of recession

TODAY NICARAGUA – The pandemic arrived in Nicaragua when the country...

Subscribe to our stories

To be updated with all the latest news, offers and special announcements.

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.