Costa Rica: Price of the dollar will remain fixed to the upper margin of the exchange rate bands regime.

A greater demand for dollars will be one the main triggers in the new exchange rate environment.

Monday, August 4, 2008

The adjustment to the width of the exchange rate bands carried out by the Central Bank on the 16th of July, along with the lack of volatility in the exchange rate, has created a feeling in the market that the US dollar will remain fixed to the upper margin throughout the rest of 2008. In the last few days, the exchange rate has remained stable at upper margin of the bands, and therefore no major changes are expected for the rest of the year.

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.

Central Bank of Costa Rica sells $24.5 million to defend exchange rate bands

August 2008

The fourth consecutive week, the Central Bank intervened in the exchange market selling foreign exchange to prevent the exchange rate from going above the preestablished ceiling.

Since the last modification to the exchange rate bands regime, the monetary authorities have been forced to intervene in the wholesale money market (Monex) in order to prevent the exchange rate from surpassing the upper limit set by the bank.

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.

Costa Rica Central Bank Forced to Buy Dollars

December 2010

The Central Bank of Costa Rica (BCCR) reported the acquisition of $ 7.5 million to defend the lower limit of the band system governing the exchange rate.

The BCCR´s intervention on the foreign exchange market increased liquidity in Colones, which in principle, and given current conditions of the monetary system, it did not have the usual inflationary effect.

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