Costa Rica central bank under fire from business leaders

Costa Rica's central bank has become involved in a dispute with the private sector whose leaders accuse the financial authorities of failing to make clear how the new exchange-rate system will work.

Wednesday, May 21, 2008

Business leaders were unhappy with the central bank's intervention in the wholesale dollar market, and accused the bank's governor, Francisco de Paula Gutiérrez, of offering an explanation "that explains nothing".
"We business people simply don't understand what lay behind the abrupt changes in the exchange rate. People imagined all sorts of things," said Oscar Cabada, president of the Chamber of Commerce.

More on this topic

Costa Rican central bank takes action to control surge in dollar

July 2008

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.

Under the country's currency-band system, the upper band (the maximum price at which the central bank sells dollars to intermediaries) has been set at 555.37 colons and will be increased daily by six céntimos.

Costa Rican central bank defends currency bands

June 2008

Amid growing criticism of the currency bands used to control the value of the colon, the Costa Rican central bank defended the system.

The bands are not an end in themselves, said the bank's president, Francisco de Paula Gutiérrez. Rather, they are a stage in the transition to a floating exchange rate.

Costa Rica central bank chief hits back at critics

May 2008

Francisco de Paula Gutiérrez, president of Costa Rica's central bank, hit back at critics of the bank's monetary policy.

The system of bands that governs the exchange rate has been under fire, and the bank has been accused of fueling speculation and uncertainty by holding back information.

5% jump in Costa Rica's currency raises eyebrows

July 2008

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.

Under this system, the external shocks are absorbed by the exchange rate, says Quirós.

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