Sunday 16 May 2021

Central Bank intervenes to remove upward pressure on dollar exchange rate

The Central bank once again sells dollars to stabilize the exchange market

QCOSTARICA – The Banco Central (Central Bank) increased its presence in the foreign exchange market to remove the upward pressure shown on the U.S. dollar exchange in recent days.

The dollar exchange, which had remained between ¢610 and ¢616, this year, in the Monex market, began to rise and went from  614.23, on April 15, to  619.48, this Wednesday, April 18

This is the average price weighted by the amount traded in the Monex market, which is where financial institutions sell or buy their surplus dollars and where exporters, importers and anyone who trades $1,000 or more also participate.

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The Central Bank this week resumed the sale of US dollars in this market to take pressure off the exchange.

On Tuesday, April 27, the Bank sold US$2.6 million and Wednesday, April 28, it sold US$957,000 under the mechanism of sales stabilization operations.

Another tool that the Central Bank has used is to lower the demand for dollars to meet the needs of the public sector.

The Bank sells the foreign exchange it requires directly to public sector institutions and then replaces them with purchases in the Monex market.

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In April, the Central Bank has sold almost US$267 million to the public sector, but has bought almost US$187 million from Monex.

Where are the upward pressures coming from?

Economist Norberto Zúñiga explained that the most noticeable change has occurred in the last two weeks, where the private sector’s foreign exchange surplus has decreased and demand from the public sector has increased.

“The process has been gradual, but persistent to the point that during this week the private supply experienced a shortage in the foreign exchange market; forcing the Central Bank to intervene by selling US$2.6 million yesterday (April 27), and today (April 28) US$1 million,” said Zúñiga.

He commented that the lower private offer is partially seasonal, with the lower income from tourism standing out.

“The greater demand from the public sector can be attributed to the increase in the oil bill, due in part to greater mobilization, but especially to higher international fuel prices,” said the economist.

This behavior of the foreign exchange market has been reflected in exchange rate adjustments, which, if they persist, could affect expectations and feedback, with eventual impacts on capital flows, added Zúñiga.

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This morning, Thursday, April 29, the Central Bank fixed the buy for one US dollar at ¢614.73 colones and sell at ¢621.67.

At the local banks, as of this morning (which is subject to change throughout the day), the state Banks – BCR, BNCR and Popular – set the buy and sell at ¢612 and ¢625.

At the private banks, the majors – BAC, Scotiabank, Davivienda – range from ¢611 to ¢626.

Click here for the Central Bank’s listing of exchange rates announced at the window by exchange intermediaries (state and private banks, mutual, cooperatives and exchange houses).

 

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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.

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