Costa Rica’s Colon needs to weaken further against the dollar, says President Luis Guillermo Solís.
The Prez, on tour (courting investors) in the United States this week, explained that the weakening will aid exporters in the wake of Intel and Banco of America pulling stakes in the country and taking away 3.000 qualified jobs.
The 9.5% decline in the Colon this year is the most among 18 Latin American and Caribbean currencies after the Argentine Peso. The Banco Central de Costa Rica (BCCR) – Central Bank, has sold dollars on 13 of the past 15 trading days, totaling about US$122 million dollars, its longest streak since 2008.
Solis said he’s “happy” with the bank’s efforts to limit volatility since he took office May 8.
“The trend toward devaluation needs to be kept,” Solis said today in an interview at Bloomberg’s headquarters in New York. “There’s no way we could keep the colon strong. Exporters and tourism investors were going crazy.”
The currency weakened 0.3%, the most in three weeks. Solis said he doesn’t have a target for the Colon and that the rate should be set by the market. A devaluation could aid the economy by making exports cheaper and luring more tourists to a country known for its tropical rain forests and beach resorts.
Solis is seeking to bolster the country’s economy.
For Costa Rica, Intel accounted for about 21% of the country’s exports of goods, or 14% of total exports, according to the Coalición Costarricense de Iniciativas de Desarrollo (CINDE) – Costa Rica’s investment promotion agency. The Santa Clara, California-based company had said it was cutting its workforce in the country as part of an effort to consolidate operations. Intel later announced plans to invest US$6 billion to upgrade a chip factory in southern Israel.
Intel said on Tuesday of this week it would expand a testing laboratory in Costa Rica that will employ 350 people. Solis, who met with company officials Monday in California, said his government will seek to improve infrastructure and education, lure more high-technology investors and expand the domestic market.