Emerging Markets Rates and Currencies Handbook

El Salvador (USD - U.S. Dollar) Citi in El Salvador Citibank NA El Salvador, was established in 1964. It focuses on clients in key segments of the economy, such as textiles, agri-business and industrials. Citi in El Salvador maintains a network agreement with Banco Cuscatlan and Davivienda (90 Collection points). Citi El Salvador is a leader in Corporate and Investment Banking in the country and is focused on transactional and structured solutions for the largest local companies, subsidiaries of multinational companies, financial institutions and the public sector. The team has strong expertise across Citi’s array of products and key local industries. Market Overview 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 Salvador’s economy is fully dollarized. The government and the Banco Central de Reserva de El Salvador (the Central Bank) has only limited influence over monetary policy through regulation of the banking system. Interest rates and the money supply are largely set by the market. The economy is directly influenced by the U.S. Federal Reserve Bank and by the stability of the El Salvador labor force abroad (remittances represent 20% of GDP). Convertibility The currency is fully convertible: El Salvador has been a dollarized economy since January 2001. Therefore FX needs are all related to hard currency, most of which are EUR and CHF spot transactions. Although EL Salvador is a dollarized economy, a G10 FX and Rates market both exist and the country’s regulations allow FWDs and NDFs to be done in local books. Offshore NDFs and FWDs in G10 currencies can also be offered as well as Interest Rate Swaps and Interest Rate Options in G10 currencies. Additionally, CitiFX Pulse has capabilities for onshore and offshore FX spot transactions. Interest Rate 210