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Mini-Devaluations to be Reviewed
The Central Bank (Bano Central
de Costa Rica) is looking for
options to discard the
mini-devaluation policy, which
it considers outdated.
For 20 years, the local
currency, the colon, has been
subject to small daily
devaluations, but bank president
Francisco Gutierrez admits that
the success of the policy has
become outdated.
He explained that the current
predictability of the rate of
exchange allows for the
underwriting of loans in
dollars, because one can figure
out the equivalent in colones,
but, if the Central Bank is
forced to speed up devaluation,
a heavy blow is delivered on
debtors.
Also, the certainty of the rate
of exchange allows for
speculative capitals in dollars
to enter the country, seeking
highly attractive rates of
interest, but bringing pressure
to bear on the colon and making
domestic prices increase.
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