Costa Rica’s Central Bank (Banco Central de Costa Rica – BCCR) is getting a billion-dollar boost by way of a credit line from the Latin American Reserve Fund (Fondo Latinoamericano de Reservas – FLAR) to strengthen its international reserves position.

Banco Central de Costa Rica building located in downtown San Jose

The loan, requested in June, is part of a series of measures by the Central Bank to lower the pressure on the dollar exchange market in the country.

Despite the FLAR seeing favorably the measures and credibility of the BCCR, it did stress that it is urgent that the country take measures to reduce the fiscal deficit. “The measures are fundamental to maintain a growing economy and stability,” said the FLAR in a statement.

In May, the dollar exchange rate went, in a manner of days, from ¢566 to ¢595 colones per one US dollar in the Monex wholesale money market.

The Central Bank restabilized and reduced the exchange rate with an injection of US$461 million dollars and began with a policy of intraday interventions.

In recent months the exchange rate has remained stable, hovering in the ¢565-¢570 range, with minor (up and down) daily fluctuations.

The BCCR said its international monetary reserves are currently at US$6.898 billion, a drop of US$675 million compared to the beginning of the year.