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New Currency Exchange System
Begins on Tuesday
Francisco de Paula Gutiérrez,
president of the Banco Central
de Costa Rica (BCCR), announced
late last night that on Tuesday
the new currency exchange system
will begin on Tuesday, October
17.
The new exchange system will be
a floating one based on market
conditions set by the local
banks and overseen by the
Central Bank.
The opening exchange will have
an opening low of ¢514.78 and a
high of ¢530.22 on Tuesday.
The Central Bank will monitor
the daily fluctuating rate which
will have a regulated low and
high.
Initially the BCCR has set a
floor and ceiling of "6 centimos
de colón"
and "14 centimos de colón"
respectively.
The floor and ceiling limits can
be changed by the BCCR board of
directors as it sees the need to
adjust to market condition.
The original plans to for
floating exchange rate was to
have taken place on October 1.
The Central Bank delayed the
introduction without setting a
date for its implementation.
However, last night at 10pm, the
surprise announcement was made
from the offices of Central
Bank's president.
In a press statement, Gutiérrez
said "the board of directors of
the Banco Central de Costa Rica
in today's session decided to
modify the policy of
mini-devaluations and a adopt
the system of a floating
exchange".
The central Bank is justifying
its decision by saying "it
responding to the need to better
handle the money policy and in
this manner is working towards
reducing the inflation rate".
What the change means is that
the daily exchange rate will
determined by free market
conditions and not set by the
Central Bank who has spent
million of dollars in shoring up
the colon against the U.S.
dollar.
Under the new system. on
Tuesday, each bank will set its
exchange rate that will be
monitored by the Central Bank.
The Central Bank will publish
the rates set by the banks on
its website (www.bccr.fi.cr)
for consumers to compare.
The banks, in setting their own
rates, will no longer be able to
charge a commission - a common
practice of adding a small
amount to the Central Bank's
exchange rate - on the exchange.
Also, banks are required to post
their exchange rate at all
branches.
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