More Efforts to Curb Depreciation

During this year, the Central Bank of Costa Rica has had to spend $1.1 billion of its reserves to participate in the exchange market and counteract the upward trend in the dollar price with respect to the Colon.

Friday, October 12, 2018

Exchange Rate (Colones / US Dollar)
Costa Rica
Al June 19th, 2019  

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According to figures from the Central Bank of Costa Rica (BCCR), from August 17 to October 12 the exchange rate in the wholesale market Monex has been increasing, going from ¢568.35 to ¢595.46 per dollar, which is equivalent to a depreciation of 4.76%. Click to interact with the graphClick to interact with the graph 

See exchange rate evolution graph.

The BCCR informed that in recent months, there has been less availability of foreign currency in the Costa Rican market. In addition to a seasonal pattern that is typical of the exchange market and that reduces the inflow of foreign exchange at this time of year, influenced the difficult fiscal situation, which: (i) it has caused the Ministry of Finance to go from being a net provider of foreign currency to being a plaintiff of foreign currency for important amounts; and (ii) it has generated uncertainty and stress in some economic agents, which at the same time has boosted the demand for foreign currency on the public side. In addition, there is the effect of higher oil prices in international markets. The low availability of foreign currency has pressed up the exchange rate, which to October 11th shows an inter-annual increase of 4.1%.

The press release of the institution explains that in this situation, the Central Bank has been using its NIR to smooth the adjustment in the exchange rate. The use of reserves has occurred in two ways. First, in 2018, the Central Bank sold foreign currency directly to Monex (USD 240.9 million up to October 11th) to prevent sudden movements in the exchange rate. The second, indirect but more important in quantitative terms, is that the Central Bank has been selling foreign currency to the non-public sector bank and has not repaid it through purchases at Monex because doing so would have exacerbated upward pressures on the exchange rate. The Central Bank thus uses USD 860.9 million of its NIR in 2018.

Read full article (In Spanish).

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Costa Rica: Intervention in the Foreign Exchange Market

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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.

Dollar Price Goes Down

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In Costa Rica, the exchange rate of the U.S. dollar against the Colon began to rise in April, but from the 3rd to date, a fall of up to 12 colones per dollar has been reported.

After the average exchange rate against the dollar in the Monex wholesale market increased from ¢599.2 to ¢607.9 between March 29 and April 3, there have been continuous declines in the last few days, since as of this month's 17th it decreased to ¢595.8, one of the lowest levels of the year.

Colon Depreciation Declines

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After the fast depreciation that the Costa Rican currency suffered weeks ago against the Dollar, in the last seven days the exchange rate has fallen from ¢629 to ¢615 per dollar.

Between August 16th and November 6th, the exchange rate in the wholesale market Monex registered an increase of 11%, rising from ¢567.97 to ¢628.81.

Costa Rica: Dollar Price Slightly Falls

October 2018

The upward trend in recent weeks in the dollar's price against the Colon has slowed.

According to figures from the Central Bank (BCCR), the exchange rate on the Monex wholesale market increased between August 17th and October 11th, from ¢568.35 to ¢597.43 per dollar, equivalent to a depreciation of 5.12%.