What is the 'HNL (Honduran Lempira)'

The Honduran Lempira (HNL) is the official currency of the Republic of Honduras. It is made up of 100 centavos, and the symbol L often represents the currency. The lempira gets its name from the 16th-century indigenous, Honduran ruler who fought against Spanish rule.

The Central Bank of Honduras manages the Honduran currency and issues banknotes in denominations of 1, 2, 5, 10, 20, L50, 100, and 500 lempiras. The bank also issues coins in denominations of  5, 10, 20 and 50 centavos.

BREAKING DOWN 'HNL (Honduran Lempira)'

The Honduran Lempira (HNL) first circulated 1931 as a replacement for the Honduran peso at par. Coins were in use by 1931 and paper currency followed in 1932. The Honduran monetary system evolved to its current form in 1950, with the establishment of the Central Bank of Honduras along with the nationalization of the Honduran payments system.

Though the National Congress of Honduras declared the Honduran Lempira to be the official currency before 1950, it was not until the founding of the central bank that the government was able to institute it as a monetary standard. Before this event, there were only two Honduran banks, and the majority of the country’s population had little access to financial services. To improve security, a 20-lempira note, printed on polymer, circulated beginning in 2010.

Hardships for the Honduran Lempira

The Republic of Honduras, located in Central America, was home to many ancient cultures, including the Maya. Many of the cultural practices of these ancient peoples blended with that of the Spanish Conquistadors beginning in the 16th century. During the Spanish conquest, silver mining was pivotal to the life of the native populations, and later, to the slaves brought in to replace the Hondurans lost to disease and brutality.

The nation gained independence from Spain in 1821 and has a long history of political instability that continues to this day. It continues as one of the poorest countries in the Western Hemisphere. In fact, Honduras is the source of the term "banana republic," which was coined by the American writer O. Henry in a 1904 short story based on his experiences while living in Honduras. The term has come to describe a politically unstable country with an economy dependent on exports of a few resources, like bananas, as has long been the case with Honduras. The nation's chief economy is agriculture, and much of the rural population are poor subsistence farmers. 

Honduras’ first major export was not fruit, but silver, which accounted for 55% of the country’s exports in the 1880's. The most prominent company to operate in Honduras during the 19th century was New York and Honduras Rosario Mining Company, which owned several productive silver mines. Bananas grew in importance starting in the 1910's, and by 1929, Honduras was exporting $21 million worth of the fruit annually.

Throughout the 1940s, 1950s, and 1960s Honduras struggled with several internal crises, a military coup, and border disputes with neighbor El Salvador. These problems led to financial hardships for the people and the country. However, a new constitution and general elections in the 1980s brought hopes of prosperity. These hopes were dashed in 2009 when a coup transferred power, and the world responded by condemning the action. 

Today, Honduras remains dependent on exports of commodities like bananas, and this agricultural focus leaves the national economy vulnerable to the effects of natural disasters. Deforestation from logging is causing soil erosion, and mining operations have polluted the nations largest source of fresh water, Lake Yojoa. 1974’s Hurricane Fifi and 1998’s Hurricane Mitch are examples of natural disasters which severely affected the country’s banana harvest, and therefore the entire Honduran economy. In recent years, the government has tried to promote economic growth through privatization and free trade agreements, although Honduras remains one world’s poorest countries.

According to World Bank data, Honduras is a low middle-income economy. The country experiences a 4.2% annual inflation rate and has a gross domestic product (GDP) growth of a 4.8%, as of 2017, which is the most current year of available data.

  1. Free Trade Area

    Free trade areas are regions where member countries have signed ...
  2. Currency

    Currency is a generally accepted form of money, including coins ...
  3. National Currency

    A national currency is a legal tender issued by a central bank ...
  4. XAF (Central African CFA Franc)

    Central African CFA Franc (XAF) is the national currency of six ...
  5. Silver Standard

    The silver standard is a monetary system which allows a country's ...
  6. Key Currency

    A key currency used is money issued by stable, developed country ...
Related Articles
  1. Personal Finance

    How the Banana Republic Credit Card Works

    For consumers who pay off their balances every month, the perks offered by the Banana Republic credit card may be worth your while.
  2. Insights

    Gap Releases Q2 Sales Results, Banana Republic Down Again (GPS)

    Gap Inc. has released its latest sales figures with Banana Republic remaining the worst performing Gap brand.
  3. Investing

    Is it Time to Climb Out of The Gap? (GPS)

    Investors are remaining bearish on clothing giant Gap Inc. They might be right for now, but what about for the long haul?
  4. Trading

    Weakest Currencies against the U.S. Dollar in 2015

    The U.S. dollar has been pummeling other currencies, largely due to falling global commodity prices. Here are the worst performing currencies of 2015.
  5. Retirement

    Retire in the Caribbean: Top Islands For Expats

    Palm trees, turquoise waters, white-sand beaches – but which Caribbean island is best for retirement? Here's what we learned.
  6. Insights

    Central Bank

    They print money, they control inflation, they are known as the "lender of last resort". Check out the role of Central Bank nd how its role evolved overtime.
  7. Insights

    Did Global Inequality Decrease After 2008?

    A World Bank study tries to show that global inequality fell after the financial crisis. Did it?
  8. Trading

    Why Having a Strong Currency Is Like Holding a Hot Potato

    Strong currencies can create complicated situations for nations and policymakers, especially when central banks use divergent and robust monetary easing.
  9. Insights

    The World Bank's All-Important World Development Indicators (WDI)

    The World Development Indicators are the world's economic scorecards: they evaluate where nearly every country stands and how far it has yet to go.
  1. Which factors can influence a country's balance of trade?

    Find out about the factors that affect a country's overall balance of trade and how it is used as an economic indicator. Read Answer >>
  2. What indicators are used in exchange rate forecasting?

    Learn what economic indicators are most widely used to forecast a country’s exchange rate and how various foreign exchange ... Read Answer >>
  3. How does inflation affect the exchange rate between two nations?

    Countries attempt to balance interest rates and inflation, but the interrelationship between the two is complex and can influence ... Read Answer >>
  4. How do national interest rates affect a currency's value and exchange rate?

    Generally, higher interest rates increase the value of a country's currency and lower interest rates tend to be unattractive ... Read Answer >>
Trading Center