February 18th, 2013 (InsideCostaRica.com) The fall in the value of the dollar on Thursday of last week put an end to the three week absence of the Central Bank in the Monex wholesale market.
The dollar fell 1.23 colones during the week. During Friday’s session, the average price was about 500.02, barely above the lower limit of the exchange rate band of 500.
The dollar drop forced the Central Bank to takes its first intervention to defend the bottom of the exchange rate band since January 21st. BCCR spent more than $5 million on Thursday to protect the 500 colon floor of the exchange rate.
Further intervention was also required on Friday when BCCR purchased $5.3 million of the $9.9 million traded during that session.
The pace at which the Central Bank has been forced to intervene to sustain the dollar consumed the entire reserves that the Bank had allotted for this purpose for 2012-2013 on January 11th.
Local economists blame the situation on foreign short-term investors taking advantage of the spread between interest returns in the local market and those abroad.
The administration of President Laura Chinchilla is attempting to curb these foreign investments by reducing interest rates and introducing a bill that would tax the profits of investments for non-residents of the country.