Emerging Markets Rates and Currencies Handbook

The Superintendent of the Financial System supervises individual and consolidated activities of banks and non- bank financial intermediaries, financial conglomerates, stock market participants, insurance companies, and pension fund administrators. Foreign investors may obtain credit in the local financial market under the same conditions as local investors. Interest rates are determined by market forces, with the interest rate for credit cards and loans capped at 1.6 times the weighted average effective rate established by the Central Bank. The maximum interest rate varies according to the loan amount and type of loan (consumption, credit cards, mortgages, home repair/remodeling, business, and microcredits). FX Spot FX Forwards NDFs FX Options Interest Rate Swap Interest Rate Options XCCY swaps Market Overview Onshore Market  ✗ ✗ ✗ ✗ ✗ ✗ Offshore Market    ✗ ✗ ✗  Onshore Volume (MM USD Daily) 130-150 N/A N/A N/A ✗ ✗ N/A Offshore Volume (MM 20-30 10-15 20-30 N/A ✗ ✗ Marginal USD Daily) Onshore Max Tenor (Or Typical Tenor T+1 N/A N/A N/A N/A N/A N/A For Spot) Offshore Max Tenor (Or Typical Tenor T+1 1 year 1 Year N/A N/A N/A 1 Year For Spot) Onshore Typical Deal Size (MM 0.5-1 N/A N/A N/A N/A N/A N/A USD) Offshore Typical Deal Size (MM USD) 3-5 3-5 3-5 N/A N/A N/A transactions are episodical Onshore CitiFX Pulse  ✗ ✗ ✗ ✗ ✗ ✗ Capabilities Offshore CitiFX Pulse Capabilities    ✗ ✗ ✗ ✗ Source: Citi indicative information Market opening hours and liquidity during the day Fixing There is no local currency and therefore no local fixing. Regulation Offshore Restrictions: There are no restrictions on transferring investment- related funds out of the country. Foreign businesses can freely remit or reinvest profits, repatriate capital, and bring in capital for additional investment. The 1999 Investment Law allows unrestricted remittance of royalties and fees from the use of foreign patents, trademarks, technical assistance, and other services. Tax reforms introduced in 2011, however, levy a five percent tax on national or foreign shareholders’ profits. Moreover, shareholders domiciled in a state, country or territory that is considered a tax haven or has low or no taxes, are subject to a tax of twenty-five percent. Law of Monetary Integration The Monetary Integration Law dollarized El Salvador in 2001. The U.S. dollar accounts for nearly all currency in circulation and can be used in all transactions. Salvadoran banks, in accordance with the law, must keep all accounts in U.S. dollars. Dollarization is supported by remittances – almost all from workers in the United States – that totaled USD 59 billion in 2020.