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"Reference Rate" To Be Used As A
Guide For Exchange
The new exchange rate system
comes into effect Tuesday
morning, however, the question
that has risen is what is the
exchange rate if one paying for
a service or receiving payment
in dollars.
The Banco Central de Costa Rica
(Central Bank) says that it will
set a "reference rate" to avoid
confusion in the market place.
Come the opening of business on
Tuesday, the Central Bank will
only set the 'floor' and
'ceiling' limits to the exchange
rate of colones to dollars, as
the individual banks will now be
able to set their own exchange
rates as long as they are within
the limits set by the Central
Bank.
The closing exchange rate on
Friday was ¢521.12 for the buy
and ¢523.39 for the sell. On
Tuesday the 'floor' for the buy
will at ¢514.78 and the
'ceiling' for the sell at
¢530.22. Banks will set their
rates based on that, which is
expected to change on a daily
basis.
Under the new system, as the
Central Bank monitors the rates
by the individual banks, it will
also publish the "reference
rate" for consumers to use a
guide for exchange transactions.
For example, if rent is payable
in dollars and the tenant wishes
to make payment is made in
colones or vice-versa, what is
the correct exchange rate?
The Central Bank advices to use
the reference rate as a guide.
The Central Bank, in its
announcement on Friday - after
the markets closed - said it
will monitor the daily exchange
rates and change the 'floor' and
'ceiling" on the basis of "6
centimos de colon" and '14
centimos de colon" respectively,
for now.
The banks will set their rates
and each individual bank,
finance, loan and co-op, will be
required to post their rates
within 10 minutes of any change
to the Central Bank, who will
publish the rates on their
website (www.bccr.fi.cr) for the
public to compare.
The "bandas cambiarias" as the
new system is called in Spanish,
is, accoding to Francisco de
Paula Gutiérrez, president of
the Banco Central de Costa Rica,
to combat inflation. In a press
statement on Friday, Gutiérrez,
said that the bandas cambiarias
is necessary to fight inflation
and better the economy, adding
that it is also necessary for
the government to have a new tax
plan to increase revenue.
"We now move to a new mechanism
of exchange that will permit us
to diminish the devaluation, the
dollarization and interest rate;
thereby reducing inflation, in
which is the entire country
wins", said Costa Rican
president, Óscar Arias Sánchez.
Arias met with Gutiérrez on
Saturday and expressed his
satisfaction with the changes
announced and the banks
expectations to reduce
inflation.
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