Tuesday 15 June 2021

Banks Throttle Back Slightly On The Dollar, As Spiral Upwads Continues

This week the private sector "went crazy" to obtain dollars, pushing up the exchange rate

It’s been a frantic week, a financial rollercoaster for the dollar exchange. In the week, the foreign currency appreciated by ¢18.39, opening last Friday at ¢601.25 and closing yesterday at ¢619.64 in the wholesale market.

At some banks we saw a high of ¢630 colones for the sell as the reference rate by the Banco Central de Costa Rica (BCCR) – Central Bank – continued on its spiral upwards.

- Advertisement -

This morning, Saturday, November 3, 2018, the Central Bank reference rate is ¢613.16 for the buy and ¢622.08 for the sell.

At the banks, the rate buy rate this morning ranges from ¢612 to ¢614, and the sell between ¢625 and ¢627.

Vidal Villalobos, economic adviser to Grupo Prival, speaking to La Nacion said that the rapid increase in the price of the dollar during this week caused people and companies to get scared and go out to buy the foreign currency.

“There is a component of fear and protection at this time in the foreign exchange market,” emphasized Villalobos.

- Advertisement -

The economist stressed that the relevant actor that presses the price of the dollar is the imbalance in the Government’s finances, which forces the Ministry of Finance to obtain, from the Central Bank, large amounts of foreign currency to pay its bills.

Central Bank Intervention

During this week, the Central Bank was the protagonist with its interventions in the wholesale market, providing 61% of the dollars that were negotiated. BCCR statistics show that US$74.4 million were traded, of which the bank sold US$45.5 million.

“Yes it has been intervening strongly to mitigate the impact on the exchange rate if the intervention had not occurred, the exchange rate would be much higher,” explained Rodrigo Cubero, president of the Central Bank.

Cubero explained that every day they have intervened either by selling currency in the Monex or the non-banking public sector, mainly the Ministry of Finance.

In the last six months, the Central Bank used US$1.6 billion of its reserves to smooth the movement of the exchange rate and make it less abrupt.

While tension with the appreciation of the dollar (or devaluation of the Colon) is strong, the Central Bank also announced on Thursday, November 1, the increase in its monetary policy rates and the rates of its term savings instruments.

- Advertisement -

With these measures, the Central Bank seeks to curb inflation and encourage people to save in colones and thus reduce the pressure on the exchange rate.

A crazy week

For William Porras, an economist at Ecoanálisis, this week the private sector “went crazy” to obtain the foreign currency (US dollar) and pushed up the exchange rate.

“The Ministry of Finance has needed reseve dollars of the Central Bank and the entity has not had the capacity to satisfy the demand of the private sector. Hacienda and Recope will always have dollars, but in the case of a private company that uncertainty generates speculation,” said Porras.

The economist pointed out that the volumes of currencies traded, both in the wholesale market and in the banks are low, which reflects the uncertainty of the market.

“People came out (this week) to buy and those who had dollars decided not to sell, to wait for the exchange rate to reach its highest level,” Porras said.

- Advertisement -

FACT CHECK:
We strive for accuracy in its reports. But if you see something that doesn’t look right, send us an email. The Q reviews and updates its content regularly to ensure it’s accuracy.

Ricohttp://www.theqmedia.com
"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

Related Articles

The “rebound” effect boosted growth in Costa Rica’s economic activity

QCOSTARICA - Costa Rica's economic activity registered in April 2021 a...

Are the days of the US dollar below ¢600 no more?

QCOSTARICA - The last time we saw the dollar exchange below...

MOST READ

COVID vaccines in the workplace: Can I ask who got their shots?

(DW) Jon works for the local government in the US state of Virginia. The 40-year-old received both his COVID shots in April. Most of...

Costa Rica cannot feel safe from covid-19 before having about 80% of population vaccinated

QCOSTARICA - No doubt, vaccines are one of the most powerful tools to maintain control of Covid-19, but when it comes to entire populations,...

Will President Alvarado be vaccinated against Covid-19 soon?

QCOSTARICA - Costa Rican President Carlos Alvarado is just another citizen when it comes to covid-19 vaccination, given his young age and good health,...

The US sanctions Nicaraguan Daniel Ortega’s daughter and close associates

TODAY NICARAGUA – The United States imposed economic sanctions on four Nicaraguan officials close to President Daniel Ortega on Wednesday, June 9, 2021, including...

Estadio Nacional

QCOSTARICA - The multipurpose national stadium, the first modern sport and event arena to be built in Central America, located La Sabana. The stadium was...

Costa Rica passes law to attract foreign pensioners and rentiers with $150K capital

QCOSTARICA - Costa Rica's legislature approved, in the first debate, a bill that reduces the minimum amount that a foreign pensioner or rentier must...

Are you fully vaccinated? You can now enter Spain

Q TRAVEL - Travelers from the European Union or third countries, including Costa Rica, who have fully been vaccinated, will now be able to...

Nicaragua government assures that detainees violated one of the Ten Commandments

TODAY NICARAGUA – The vice president of Nicaragua and First Lady, Rosario Murillo, assured that those who feel persecuted are for the crimes they...

Tourism sector feels in crisis despite increase in international arrivals

QCOSTARICA - Despite the improvement in tourist arrivals reported in May, with more than 72,000 visitors, both the Cámara Nacional de Turismo (Canatur) and...

WANT TO STAY UP TO DATE WITH THE LATEST!

Get our daily newsletter with the latest posts directly in your mailbox. Click on the subscribe and fill out the form. It's that simple!

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.