Emerging Markets Rates and Currencies Handbook

Honduras (HNL - Honduran Lempira) Citi in Honduras Citi started operations in Honduras in 1965, after purchasing the majority stake in Banco de Honduras, the oldest financial institution in the country with over 129 years of experience and initially serving as Honduras currency issuer prior to the establishment of the Central Bank of Honduras. Citi has offices in the country’s two largest cities: Tegucigalpa, the nation’s capital and seat of government, situated in the center of the country, and San Pedro Sula, the nation’s business and industrial center, located in the north, near the Atlantic coast. Market Overview The Central Bank (CB) of Honduras regulates the local FX market and has implemented a crawling peg exchange regime. Those looking to buy USD can purchase USD depending on the amount, directly from Banks or through an auction process with Central Bank, as established by local regulation. For USD Buyers: For amounts above USD 10,000, Buyers must buy through an Central Bank's auction process. Maximum allowed amount per day and per Legal Vehicle is to bid up to USD 1.2MM through banks. Amounts below 10,000 USD can be directly purchased from a bank. Both processes are mutually exclusive. An upper FX band is defined daily by the Central Bank. For USD Sellers: There are no amount restrictions for USD sellers. All transactions are closed at a CB daily defined rate called “Tipo de Cambio de Referencia” (TCR). The forward market in Honduras, although available, has very limited liquidity and only OTC trades are possible with a few local institutions, including Citi. Currently, there is no interdealer market and as such, any trade is usually analyzed and closed on a case-by-case basis, taking into consideration limited market capacity. Convertibility Honduran Lempira is a restricted currency with convertibility regulated by the Central Bank through a 223