According to the economist Luis Diego Herrera Solera, from Acobo Financial Group, dollar credits have slowed down in the last quarter (June to September) due to the following factors:
-Upward trend in the exchange rate
-Higher expectations of devaluation
-Prudential measures for financial institutions to fight currency risk associated with lending to people that do not earn their incomes in foreign currency.
Credit granted by the banking system to the private sector showed that year on year the total loan portfolio grew by 11.3% in September. In colones, the credit balance increased by 9.8% and 9.2% in dollars.
On the other hand, financial deposits in dollars have increased, contrary to what is shown in colones.
From the second half of the year, the trend is even more marked, as the growth rates of financial wealth in dollars significantly exceed those in colones.
One factor that explains this behavior is the upward trend in the exchange rate in recent months, which has joined devaluation expectations of economic agents, causing many to decide to have their financial wealth in dollars, which could continue in the coming months.
Given this, it is important to know the ultimate goals for which future cash flows will be needed, prior to deciding the currency of your assets. If the decision is about changing currency, you must incorporate short and long term prospects, both for the exchange rate and the interest rates, because depending on the investor, even before the change in trends, it might still be more advisable to stay in colones; and change into dollars in other cases.