March 8th, 2013 (InsideCostaRica.com) After nearly a month without having to buy dollars to prevent the dollar from sinking below the 500 colon “bottom band,” the Central Bank had to intervene in the market again as the dollar sank to 500.01 colones on the MONEX exchange yesterday.
A bill that was introduced that would control speculative capital inflows helped the dollar rebound slightly earlier this year, but it didn’t last long. Between February 14th and 15th, the Central Bank was forced to purchase more than $11 million to defend the 500 colon bottom band, and in the last 10 days has been forced to purchase a similar figure.
The president of the Costa Rican Union of Chambers and Associations of the Private Business Sector (UCCAEP), Jaime Molina, said lack of progress on passing the bill pushed the dollar back to the floor of the exchange rate band, and added that the dollar will stay there until the government is able to get its fiscal deficit under control.
Molina criticized both the Central Bank and the government for not taking into account the recommendations of the UCCAEP regarding capital controls.