Saturday 25 October 2008, San José, Costa
Rica
Costa Rica, Panama Sign
Free Trade Deal
Central Bank
Manager Denies Sharp Rise In Dollar
Despite Rumours
Pacheco: The Presidency
Is Yours!
Exports Decelerate
Freedom Of The Press
|
Central Bank Manager
Denies Sharp Rise In
Dollar Despite Rumours
Despite the rumours
circulating in financial
circles of the
possibility of the US
dollar exchange gaining
some ˘50 colones in the
coming weeks, the
manager manager of the
Banco Central de Costa
Rica (BCCR) - Central
Bank, Roy González,
explained that that is
not possible while the
country maintains a "banda
cambiaria" policy.
The current currency
exchange policy by the
Central Bank is to allow
only an increase of only
"6 centimos" per day, in
that way, even though
the exchange rate is at
the "ceiling" limit, it
can not shoot up.
The banda cambiaria is a
system of a high
(ceiling) and a low
(floor) that the
exchange rate can move
freely without
intervention by the
Central Bank. The
current ceiling is
˘559.51 and the floor at
˘500. The exchange rate
as been inching at the
ceiling limit for some
time.
González explained that
the Central Bank has a
commitment to supply the
financial system with
the dollars necessary to
maintain the rate within
the limits and that the
Central Bank has not
taken any decision on
changing the limits,
believing that the
country's situation is
complex but "there is no
reason to have episodes
of excessive
volatility."
"The bank has always
been looking for ways to
establish the necessary
protection for the
economy to meet either
the circumstances of the
financial crisis and has
thousands of
international monetary
reserves, exceeding the
amount of colones in the
economy, also has access
to outside lines with
the Fondo
Latinoamericano de
Reservas (Latin American
Reserve Fund) which
gives the country the
ability to purchase up
to an additional $350
million dollars if
necessary", explained
González.
González added that the
Central Bank has enough
dollars in reserve "to
buy twice the monetary
base of the national
economy".
González explained that
the dollar will shoot up
only if there is an
"important crisis" and
the Cental Bank changes
its current policy,
which is not foreseen at
this time, since the
dollar reserves are high
and the Bank has the
ability to obtain more
with ease.
González did admit that
the country will go
through an adjustment,
but nothing abrupt in
the exchange rate. The
changes, according to
the Bank manager, is a
slow down in exports due
to the deceleration of
the economy of Costa
Rica's principal trade
partner, the United
States.
However, that is already
been taken into account
the Bank's economists,
according to González,
who added that the most
important now for people
is to go back to a habit
of saving and be prudent
with their spending,
especially now as the
Christmas season
approaches.
|
|
|
|
|
|
|
|
