The lempira is the official currency of Honduras. This decimal currency is subdivided into 100 centavos. The lempira is named after a hero of the native Lenca people who has taken a position of high honour in Honduran Folklore. Although historical accounts of Lempira differ, it is agreed upon that he led the resistance against the Spanish conquistadors who eventually killed him and proclaimed ownership of the land in the name of Spain. The Honduran lempira is issued by the Central Bank of Honduras, the nation’s sole monetary authority.
The lempira was conceived as a replacement for the peso in 1926, but it was not put into circulation until 1931. The lempira was valued on par with the peso. The new currency was part of a sweeping liberal reform program encompassing all aspects of the country and government. One of the final initiatives of the reform came in 1950 with the establishment of the Central Bank of Honduras. The Central Bank carried out the duties of providing for monetary stability for 46 years under the original legislative decree that created it.
In 1996, new reforms were adopted to bring the bank’s duties into the modern financial era. The primary functions of the Central Bank of Honduras are to set monetary, credit and foreign exchange policy. Other functions include issuing currency, administrating monetary reserves, and act as the State banker. An important aspect of the bank’s monetary policy is to keep the inflation rate a single-digit percentage starting in 2008, but it has, so far, failed to do so.
The first lempira coins began circulating in Honduras in 1931. Since that time, the original 1 and 2-centavos coins have been discontinued. Coins currently in circulation are in denominations of 5, 10, 20 and 50 centavos. Banknotes were first issued in 1932, and have been updated as recently as 2010 with the addition of a polymer 20-lempira note. The other banknote denominations are 1, 2, 5, 10, 50, 100 and 500 lempiras.
Although the 1998 devastation of Hurricane Mitch left Honduras in ruins, the nation’s economy has been steadily recovering at the rate of four percent annually. Honduras benefits from having the second-largest export manufacturing, or maquiladora, industry in the world. Over 120,000 Honduran people are employed in the industry. On the downside, Honduras suffers from high inflation that continues to hold back economic growth. Inflation is estimated to be at an annual rate of 11 percent.