The Quetzal Is Innocent

Once a year an exporters' association issues a communiqué asking the central bank to let the quetzal fall. Once a year the central bank declines. We have read ten years of both, and we side with the bank.

The quetzal has moved within a band of four percent against the dollar since 2015. Over the same decade Guatemala's export volumes to the United States rose by less than Honduras's and far less than the Dominican Republic's, two countries whose currencies were no weaker. If the exchange rate were the constraint, the effect would show in the countries that lacked it. It does not.†

The exchange rate is the one bottleneck Guatemala does not have.

What the decade of flat volumes correlates with is not price but time: days in port, days in customs, days waiting for a permit that a competitor's bureaucracy issues in hours. A devaluation would make every one of those days cheaper without making a single one shorter.

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† Sample figures; not independently verified.