From hyperinflation to the córdoba oro

Nicaragua's inflation chart includes a hyperinflation in the 1980s, when civil conflict, a US trade embargo and large deficits financed by the Banco Central de Nicaragua pushed annual inflation to several thousand percent, above 10,000 percent in 1988 by commonly cited estimates. The government introduced new currency units and, after the 1990 change of government, a stabilisation programme in 1991 replaced the córdoba with the 'córdoba oro' pegged to the US dollar. The central bank has since used a crawling peg, in which the córdoba is devalued by a fixed annual rate, which was 5 percent in the 1990s and was reduced to 3 percent and later to 2 percent a year. The predictable devaluation anchored inflation expectations, and annual inflation has generally stayed in single digits, although most savings and loans are in dollars, which limits the central bank's room to manoeuvre.