5% jump in Costa Rica's currency raises eyebrows
The tumble of 5 percent in Costa Rica's exchange rate in a single day has caused some observers to question the model of maintaining an exchange rate range, says Melizandro Quirós in a column in the web site Nacion.com.
Tuesday, July 22, 2008
Under this system, the external shocks are absorbed by the exchange rate, says Quirós.
The Costa Rican central bank, the BCCR, modified its exchange-rate policy in an effort to control a surge in the value of the US dollar on local money markets.
The value of the dollar has risen by 11 percent against the Costa Rican colón over the last three months.
Amid growing criticism of the currency bands used to control the value of the colon, the Costa Rican central bank defended the system.
After in the increase in the growth rate of the ceiling of the exchange band, the reference exchange rate continues to be close to the ceiling.
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