Costa Rica : Central Bank defends the Colon

The Central Bank of Costa Rica sold $32 million in order to curb the rising exchange rate which closed at 543 colones per dollar.

Tuesday, February 25, 2014

The amount by which the central bank intervened to support the exchange rate on the wholesale market was the highest since 2008.

By midafternoon Tuesday 25, the exchange rate was about 547 colones per dollar, 5 colones above Monday's closing price.

From a statement issued by the Central Bank of Costa Rica:

"Based on the intervention policy disclosed publicly in recent weeks, on 24 February, the Central Bank intervened again on the Monex exchange market, in light of a sharp rise in the exchange rate.

$27.8 million was traded on the Monex, of that amount $0.9 million were purchases made ​​by the BCCR for the public sector. Of the remaining amount, $9.4 million were transactions between private sector participants and $17.5 million were sales made ​​by the BCCR to these types of participants as part of its intervention. That gives a total of $26.9 million demanded by the private sector, where one part was supplied by the private sector itself and the other from the Central Bank.



More on this topic

Costa Rica: Intervention in the Foreign Exchange Market

November 2019

With the aim of cushioning the fall in the price of the dollar, which between November 5 and 25 was reduced in ₡18,35, in just two days the Central Bank intervened buying more than $30 million.

Of the $41.5 million negotiated at Monex during the November 22 session, the Central Bank of Costa Rica (BCCR) purchased $36 million, and of the $30.7 million negotiated on November 25, the monetary authority acquired $27 million.

Costa Rica: Slow Depreciation of Colon Continues

September 2016

The exchange rate in the wholesale Monex market has gone from ₡535.9 per dollar in mid-March to ₡553.9 in the first week of September this year.

Despite interventions by the Central Bank, the exchange rate in Costa Rica has maintained a clear upward trend for several months, reflecting in a devaluation of 3% so far this year.

Dollar in Costa Rica: Wholesale Market Participants Excluded

June 2014

In an attempt to limit exchange rate volatility, the Central Bank has determined that non-bank public companies can no longer trade currencies in the Monex wholesale market.

As explained by the entity, the foreign exchange requirements of the Non Banking Public Sector will not be served directly by the BCCR using international reserves.

Uncertainty Over Dollar in Costa Rica

June 2014

A proliferation of articles, reviews and editorials on the exchange rate is the best example of the prevailing concern in a market waiting for a clear definition of the exchange rate policy by the Central Bank.

Editorial

In recent weeks, and while the President of the Central Bank of Costa Rica (BCCR) is denying it , warnings have been given over interventions in the foreign exchange market by the monetary authority.

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