The Central Bank of Nicaragua (BCN) has announced that as of January 2024, the sliding rate or “crawling peg” exchange rate on of the Nicaraguan Córdoba (NIO) with respect to the US Dollar will be zero percent (0%) per annum.
At a Glance – 0% Currency Slippage Rate for 2024; Córdoba against the US Dollar.
- The exchange rate slippage of zero percent (0%) will come into effect as of January 1, 2024.
- The monthly chart of the Daily Official Exchange Rate that has always been published by the BCN will be available on the BCN website at the tipo-de-cambio-oficial link up to an including the December 2023 edition.
- As of 2024, the monthly tables showing the Daily Official Exchange Rate will no longer be published.
- The opening official exchange rate “for all of 2024 will be 36.6243 Córdobas per One (1) US Dollar”.
- This amount follows on from the exchange rate the previous day, December 31st 2023.
- The reason that the slip rate announcement has been made so early (August 2023) is to allow for “greater exchange rate predictability, to facilitate the formulation of the State budget, the BCN’s programming of currency as well as business planning”.
NOTE: The Maintenance of Value Clause remains in effect. This clause states that any contract may contain a clause whereby values expressed in Córdobas will maintain their value in relation to a foreign currency. In this case, if there is a change in the official exchange rate of the Córdoba in relation to the said currency, the amount of the obligation expressed in Córdobas must be adjusted in the same proportion to the change made in the exchange rate.
Sliding Rate and the Bank of Nicaragua Decision
The BCN has steadily reduced the sliding rate or “crawling peg” (devaluation) of the Nicaraguan Córdoba since November 1st 2019 when (for the first time since 2004) it was reduced, this time to 3% per year.
A little more than a year later, on December 1st 2020 it was further reduced to 2% followed by the reduction this year to 1% as of February 1, 2023.
The Board of Directors of the BCN believes there is an adequate framework of macroeconomic policies and macro financial indicators. As well, recent economic developments show;
- Growing economic activity,
- Consolidated public finances,
- Financed balance of payments,
- A stable financial system,
- Growing international reserves and…
- Monetary and exchange stability.
In addition the BCN points out that they have not intervened in the foreign currency sale market for the last three years (since August 2020). Foreign currencies have freely traded in the market during that time. They add that also during that time, the BCN has only bought currencies (at the Official Exchange Rate) that banks and financial companies freely sell to the BCN to satisfy the greater demand for Córdobas by the public.
The BCN believe that favorable conditions resulting in the 0% sliding rate “will contribute to the strengthening of the national currency and offset the effects of high international inflation on the national economy, thus favoring the purchasing power of the population”.
