Dollar sees huge one-day rally in Costa Rica, reaches highest price in 2 years

January 30^th, 2014 (InsideCostaRica.com) The dollar gained ¢6.55 on the Monex wholesale market in a single day yesterday, reaching a level not seen in two years.  The currency reached a sale price as high as ¢526 in retail banks.  This morning, the Central Bank reference rate was ¢505.12 (buy) / ¢518.14 (sell) – an increase of ¢6.54 on the buy side and ¢7.06 on the sell side since yesterday, when the Bank’s reference rates stood at ¢498.58 /  ¢511.08, respectively.

The dollar rally forced the Central Bank to intervene yesterday by selling $1 million into the market – a step the Bank has not had to take since June 12, 2008.

Despite the dollar’s gains, trading volume remained stable through yesterday’s session.

Economists said the dollar’s rally was a result of increased demand for the U.S. currency in the private sector, as well as in some public institutions such as the Costa Rican Oil Refinery and the public health system known as CCSS.  While demand for the currency has risen, the supply has not, analysts said.

Earlier this month it was predicted that the dollar could see gains in Costa Rica as the United States pulls back on its “stimulus” expansionary monetary policy, which analysts said could drive some capital back to the US.

Yesterday, the US Federal Reserve announced a further $10 billion in cuts to its stimulus program.