El Salvador - Money



El Salvador Money 1374
Photo by: Kheng Guan Toh

Stabilizing El Salvador's currency and keeping inflation down are key components in the government's plan to attract foreign investment. In 1994, the colon was fixed at ¢8.755 = US$1. Strong reserves allowed the Central Bank to maintain the fixed exchange rate. Bank reserves in 1999 were US$1.97 billion, nearly 4 times what they were in 1992, when reserves stood at US$501 million. The end of the civil war, privatization of state assets, and strong family remittances have fueled the growth in reserves, which rose US$204 million in 1999 alone.

On 1 January 2001, the government in El Salvador gave up control of its monetary policy . It abandoned the fixed exchange rate and "dollarized" the economy. Thus, U.S. currency can be used in El Salvador as legal tender. El Salvadoran monetary policy is now effectively in the hands of the U.S. Federal Reserve Bank.

Proponents of dollarization say it will keep the currency stable and help drive interest rates down. Critics argue that the export sector could be hurt by the move. They point out that exporters are having trouble maintaining market share in the global economy. Converting to the dollar, they argue, might lock in this competitive disadvantage.

Exchange rates: El Salvador
Salvadoran colones per US$1
Jan 2001 8.755
2000 8.755
1999 8.755
1998 8.755
1997 8.755
1996 8.755
Note: Salvadoran currency has been at a fixed rate since 1993.
SOURCE: CIA World Factbook 2001 [ONLINE].
Also read article about El Salvador from Wikipedia

User Contributions:

1
pebblez
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May 31, 2012 @ 6:18 pm
I need info.and I got what I needed. Thanks for everything
2
Samantha
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Sep 12, 2012 @ 2:14 pm
Hi my name is Samantha and I want to know; what would happen if the citizens of El Salvador tried and copied money? What punishment would they get, if there was a punishment.

Please and Thankyou.
3
Robert Fiala
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Jan 16, 2019 @ 6:18 pm
Hi, would you mind telling me who is depected in the coins and notes of Salvadorian dollar?
Thank you in advance!

Best wishes,
Robert

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