Pressure on Costa Rican money markets lifts the dollar
As pressure build up on Costa Rica's money markets, the only way seems to be up for the US dollar.
Friday, June 13, 2008
The nation's current account balance is showing a large deficit, and flows of investment – both financial and direct – are down. "There's a combination of factors behind the rise in the dollar's exchange rate," said Andrés Víquez, manager of the Aldesa brokerage.
Arguing an attempt to control credit growth in dollars, the Central Bank will apply a reserve limit of 15% to banks that receive lines of foreign funding in that currency.
A bill is being prepared to impose taxes on money which enters the country seeking to exploit the gap between interest rates in local currency and in dollars.
The discretionality of interventions made by the central bank in the foreign exchange market could open the gate for unjust enrichment of those who have inside information.
The Central Bank of Costa Rica continues to intervene in the market to prevent the price from exceeding the upper limit of the current bands.
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