José Alfredo Blanco Valdés, vice president of the Bank of Guatemala (Banguat), announced a perspective on the evolution of the exchange rate, as well as the participations that have been in the market to moderate volatility in recent weeks associated with seasonal factors.
The central bank has detected a surplus of dollars, so it also activated the mechanism for accumulation of monetary reserves and at two auctions made last May 16 and 23 for a total of US $ 200 million.
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The exchange participation rule has been activated both for purchase and for sale and in recent days the official reference is Q7.66 for US $ 1. From January to May, the Banguat has come out to buy US $ 1,559.7 million while selling US $ 284 million, according to official reports.
This year there was modification to exchange policy and the margin of participation was extended, that is, it was flexible. Then to be able to participate in the institutional currency market, the rule will be activated when it is equal to or less than the mobile average of the last five days of the reference exchange rate, less a margin of fluctuation of 1%. In 2024 the margin of fluctuation is 0.95%.
Banguat participations are being observed in the market, what explains it?
The trend is seasonal, especially now in May that enters a lot of remittance on the issue of Mother’s Day and that is why it is in Q7.66 for US $ 1. Also seasonally, we have observed that, in the second half of the year, it begins to rise a little.
The participation mechanism for accumulation of international monetary reserves was activated we have caught US $ 100 million last Friday and there is a quota of US $ 500 million.
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Why?
There is a lot of liquidity surplus in banks, which is the result of the increase in flows by remittances. So, that allows us to handle and moderate the volatility of the exchange rate supporting the rule.
But this is natural, which makes the central bank execution committee, which occur when there is an excess of liquidity in the economy through banking.
“The trend is seasonal, especially now in May that enters a lot of remittance on the issue of Mother’s Day and that is why it is in Q7.66 for US $ 1. Also seasonally, we have observed that, in the second half of the year, it begins to climb a little”
José Alfredo Blanco Valdés, vice president of Banguat
What could be expected in the second semester?
We cannot project at this time, but what we can follow is that we will continue to apply the rule and the accumulation of reserves to moderate volatility the exchange rate and, on the other hand, to eliminate a bit the excesses of liquidity in dollars in the market.
What explains the effect of remittances in May on exchange rate?
Now they are growing at a rate of 16% the accumulated and last year to this same date was growing half (8%).
We believe that this difference is the “greatest savings” that compatriots derived from immigration policy in the United States are sending. What we see is a bit of upward accommodation of the flows, since we had a 6% projection, so it has just been reviewed and we estimate that the growth will be 9% at the end of the year with about US $ 23,400 million (about Q180 billion).
To May 15, US $ 8,711 million had entered the country, which means an increase of 16% in accumulated terms from January to May and is greater than 8% registered in the same period last year.