During 2019, the price of the dollar in Costa Rica registered multiple fluctuations; however, for this 2020, such abrupt variations are not anticipated, since the Central Bank starts the year with reserves close to $9 billion.
Data from the Central Bank of Costa Rica (BCCR) show that between February 4 and November 28, 2019, the average dollar price in the Costa Rican market fluctuated considerably, ranging from ₡614.31 to ₡562.63.
The Latin American Reserve Fund has approved a $1 billion loan to improve the capacity of the Central Bank to intervene in the exchange market.
From a statement issued by the Central Bank of Costa Rica:
On October 2, 2017, the Board of Directors of the Latin American Reserve Fund (FLAR) approved a request by the Central Bank of Costa Rica (BCCR) to obtain a Balance of Payments Support Credit in the amount of US $1 billion, to strengthen the country's international reserves position.
In a new effort to avoid abrupt increases in the exchange rate, the Central Bank has announced that it will now be able to sell more dollars directly to public institutions.
So far the Central Bank has had to respect the limit of 8% of the average balance of the Net International Reserves in direct sales of dollars to public sector entities.The Central Bank decided to eliminate this limit in order to be able to sell them the dollars that they require and thereby avoidturning to the wholesale Monex market to buy them from financial entities
A record amount of $1.938 billion in gross international reserves has been recorded in the country, a reflection of the stability and economic growth in recent years.
Mario Arana, former president of the Central Bank of Nicaragua (BCN) notes that the policy of fiscal discipline that has been maintained, has allowed the reserves to accumulate, which provide an optimistic outlook on any external shocks generated by the current problems of the industrialized economies.
A week after Antenor Rosales declared that international reserves "are not to be managed according to someone’s whims and preferences", he has been dismissed by President Ortega.
Alberto Guevara, hitherto the Minister of Finance, is the new Chairman of the Board of the Central Bank of Nicaragua. Guevara said that the economic policy of Daniel Ortega’s government will not change.
Markets closed with the dollar at ¢518.34, ¢7.88 higher than the day before, after the Costa Rican Central Bank's (BCCR) decision to increase foreign exchange reserves.
Since the BCCR announced the news, the dollar's price increased steadily, reaching a high of ¢523,01 before finally closing at ¢518.34.
Rodrigo Bolaños, president of BCCR, said that, "in the coming days it will be interesting to see what direction the exchange rate takes because just the announcement alone has caused it move up by several colones," reports Nacion.com.
The monetary authority has launched a scheme to acquire international reserves, immediately causing the exchange rate to rise.
In his blog for Nacion.com the analyst Jorge Guardia highlights that this intervention represents a trimming and sprucing within the limits and a fundamental change in Central Bank (BCCR) policy that lacked due transparency.
Inflation deceleration and Risks to economic recovery.
The quarterly report from the Executive Secretary of the Central American Monetary Council (SECMCA) focuses on the region's inflation and recovery prospects.
Inflation, measured by year-on-year change in consumer prices, slowed in the second quarter of 2010 to 4.9%, compared to 2.9% in June 2009. This level is within the target limits set by the region's central banks.
Monthly Index of Economic Activity (IMAE), exports, remittances, international reserves, exchange rates, inflation, tax collection, banking system, foreign investment, tourism and outlooks.
Oscar E. Mendizábal, editor of the Blog “Desde Guate” (From Guatemala), gathers and analyses the main factors influencing the Central American economy (except Panama) during the first six months of this year.
IMF advices: contain current spending, especially the wage bill, and strengthen the finances of public enterprises, public pension funds, and municipalities.
March 25, 2010
Mario Garza, resident representative of the International Monetary Fund (IMF) in Tegucigalpa, issued the following statement today:
“With the objective of assessing developments and the near-term outlook of the Honduran economy, an IMF mission met with President Porfirio Lobo, the economic cabinet, congress, and private sector representatives. The mission wishes to thank the authorities for their excellent cooperation and candid discussions. In 2009, the global economic slowdown and the political crisis contributed to an economic contraction of 2 percent. In the fiscal area, despite a decline in public investment, the fiscal deficit rose markedly due to a substantial increase in current spending, mainly the wage bill, leading to a large increase in the public domestic debt. In the context of an expansionary monetary policy, the increase of central bank credit to the public sector contributed to a loss of international reserves. The authorities and the mission shared the view that maintaining expansionary policies is not sustainable and that a solid macroeconomic framework is required to foster economic growth in Honduras.
The country received $5.13 billion in the first ten months of the year, 17.2% less than the same period of 2008.
Maquila was the worst-hit sector, as it received $250 million less than last year, according to data from the Central Bank.
"... it was followed by remittances, which diminished 10.9% or $245.5 million, capital and financial flows ($187.4 million reduction), exports of goods ($169.3 million less), exports of services ($138 million less) and rents ($97.2 million less)", reported Laprensahn.com.
The currency is moving up again, synchronized to the end of the tax paying period, and after one month of relative stability.
On Monday 14, the dollar began the day valued at ¢581 in the wholesale market. As the trading session progressed, upward pressure began to affect its price. At the end of the day, $1.8 million were traded at the upper enforced limit, ¢596.05.
Moderated reduction in IMAE, drop in international reserves, pressure on the exchange rate and a worsening fiscal situation.
Costa Rican Economy Still in Recession
An improvement in economic activity has been observed in the second trimester. From April to June, the Monthly Index of Economic Activity (IMAE), recorded an annualized growth rate of 5.9%, while it had contracted at an annualized pace of -0.9% in the first trimester.
A precautionary agreement signed by the previous administration in January has been reactivated.
This was announced by President Mauricio Funes, who remarked that even though the agreement had a validity of 6 months, it had been rendered ineffective by lack of compliance with the established conditions.
Capitales.com reports: "On that occasion, the administration of former president Antonio Saca established a 2.7% fiscal deficit, which could not be achieved because of the economic crisis".
The Central Bank of Honduras informed they increased their monetary reserves with these $150 million.
By providing this funds as special wire rights, the International Monetary Fund (IMF), becomes the first international entity recognizing Honduras interim government.
"The loan, in concession conditions, is part of the international support program by G-20 for developing economies.