Exporters Calling For Elimination
of "Bandas Cambiarias"
The value of a US dollar to the Costa Rican Colon is still on
everyone's lips. The exchange rate is a topic of daily discussion in
many circles, especially when there is a great fluctuation, up or
down, from one day to the next.
The fluctuation is due to the monetary policies of the Banco Central
de Costa Rica (BCCR) - Central Bank - using a system of "bandas
cambiarias" (exchange bands) which policy has exporters upset.
The Cámara de Exportadores de Costa Rica (Cadexco) is demanding the
Central Bank to eliminate the bandas cambiarias policy and go back
to the policy of daily "mini devaluations" that was in place until
November 2996.
The current exchange policy has seen big drops and gains in the rate
of exchange in a single week and at times in a single day. During
the past several months, on several occasion, the exchange has
fluctuated by as much as ¢10 colones on a single day.
The "bandas" policy allows the Central Bank to establish a minimum
and maximum for the value of the US dollar. The current ceiling is
¢555.37 colones with daily increases of ¢0.20 colones and a floor of
¢500.
However, the daily exchange rate set by the Central Bank is only a
guideline for the financial institutions, who are free to sell and
buy dollars at rates higher or lower than that established by the
Central Bank, this because the Central Bank rate is established for
the wholesale market.
That is why the sell rate this morning at some banks is ¢563, while
the majority's is ¢561.
"It has been proven that the band has not worked and as exporters we
definitely want to return to the mini-devaluations, that creates a
calm in the market, we know that does not affect inflation", said
Mónica Araya, president of Cadexco.
Araya added that the current monetary policy is chocking the export
sector and is urging the government to react to avoid a great impact
on exports.
Exporters are dependent on the exchange rate policies as they need
daily to purchase dollars to make their purchases for raw materials,
which for the most part is imported.
The president of the Central Bank, Francisco de Paula Gutiérrez,
said the bank has shown flexibility by allowing small daily
increases on the ceiling of the bands.
Economists and financial experts have continually blamed the Central
Bank for the 13.9% inflation for 2008.
The Central Bank had predicted an 8% inflation rate for 2008 and
last week predicted a 9% inflation rate for 2009. |
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