New 0% annual devaluation of the cordoba against the dollar comes into effect in Nicaragua

Nicaragua this Monday launched a new devaluation rate of the Nicaraguan Cordoba in relation to the US dollar, set at 0% annually, which, according to independent economists, will benefit the state and could harm dollar-paid workers, families, and families. exporters

The decline of the cordoba against the dollar dropped to 0% per annum since February 1, 2023, after being at 1% per annum.

According to the Central Bank of Nicaragua, from January 1 to December 31, 2024, the official exchange rate will be 36.6243 cordoba (national currency) per US dollar.

For independent economists such as Enrique Saenz, reducing Córdoba’s slippage relative to the dollar benefits the state more than Nicaraguans, especially if inflation is not stable.

The state-issuing bank announced last August that its board of directors had decided to reduce the sliding rate of the Cordoba’s exchange rate against the US dollar from 1% to 0% by January 1, 2024.

The monetary unit explained at the time that the decision was adopted four months ago “to provide greater exchange predictability, as well as to facilitate state budget formulation, monetary programming and business planning of the Central Bank of Nicaragua.”

gradual reduction by 5%

This is the fourth time in less than five years that the Central Bank has reduced the slip rate of the Cordoba exchange rate against the dollar.

In 2019, it reduced it from 5% to 3%, from 3% to 2% annually from December 1, 2020, and from 1% to 0% from February 1 to December 31, 2023.

Since 2004, the Central Bank has maintained the currency’s slippage rate against the dollar at an annual adjustment of 5%.

The monetary unit said the measure was adopted within the framework of macroeconomic policies and appropriate macro financial indicators.

Moreover, as he underlined, “because recent economic development presents the following results: increasing economic activity, consolidated public finances, financed balance of payments, stable financial system, growing international reserves and monetary and exchange stability.”

The Central Bank expects that “amid these favorable conditions, the slippage reduction will contribute to the strengthening of the national currency and balance the impact of high international inflation on the national economy, thereby boosting the purchasing power of the population.” ,

According to official data, Nicaragua’s gross domestic product (GDP) grew by 3.8% in 2022, the second consecutive year of growth (10.3% in 2021), with inflation of 11.59%, the third consecutive year of closing in the red. After .

For 2023, the Central Bank forecasts economic growth of a minimum of 4% and a maximum of 5%, with inflation of 4.5% to 5.5%. efe