The greenback fights back in Costa Rica
The recent tendency in the dollar's exchange rate against the Costa Rican colón represents a change that provides an incentive for inversions in the US currency.
Tuesday, May 20, 2008
History seems to be repeating itself. Many investors betted on a rise in the value of the colón when the exchange rate began to stick on the exchange-rate system's lower band. Now, with the strengthening of the dollar they are seeking to get back into dollar investments.
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.
The loss of competitiveness in exports and tourism generates unemployment, but intervening in the exchange rate will generate inflation.
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.
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.
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