Tuesday 29 November 2022

Dollar exchange at lowest point of the year

The Central Bank reference this October 15 is ¢621.03 for the sell and ¢612.79 for the buy, from a high of ¢698.44 and ¢691.20, respectively, on June 23

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Dollar Exchange

¢596.70 Buy

¢602.92 Sell

29 November 2022 - At The Banks - BCCR

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QCOSTARICA – What has happened to the dollar exchange, dropping to the lowest point this year, after a historical high in June?

The Banco Central (Central Bank) reference rate this Saturday, October 15, is ¢621.03 for the sell and ¢612.79 for the buy. On June 23, the reference rate reached ¢698.44 and ¢691.20, respectively. See here the official dollar exchange at banks and financial institutions as reported to the Central Bank.

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At the commercial banks, both private and state, it exceeded ¢700 colones for one US dollar on that occasion. However, this Friday it dawned between ¢623 and ¢632, according to the bank.

This is a drop of almost ¢78 colones in almost four months.

The last time the colon was this low was in August 2021.

Financial analyst, Jorge Benavides, stressed that this reveals an improvement in the country’s economy, and indicated that there is currently no pressure, influenced by a greater abundance of foreign currency in the private sector, so it could be expected that the exchange rate will decrease even more.

The president of the Central Bank, Róger Madrigal, had pointed out in an interview with La Nacion, on September 23, several factors that influence the greater amount of foreign currency in the market: oil prices fell and the RECOPE, the Costa Rican oil refinery that refines nothing, has reduced its demand for dollars, as have pension operators. On the supply side, tourism has been very good this year.

Also influencing the lower exchange rate is the rise in interest rates paid on deposits in colones affecting the demand to dollarize savings.

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The Central Bank has not carried out interventions in the Foreign Currency Market (MONEX), to stabilize the exchange rate, since August of this year.

What could reverse this trend is the Central Bank decision on new adjustments in the monetary policy due out on October 26 and the U.S. Federal Reserve decision on November 2.

Juan Pablo Arias, an economist at the Bolsa Nacional de Valores (National Stock Exchange), told La Nacion “all of this will be key”.

“If the Central Bank of Costa Rica increases its reference rate, it influences the rates in colones to also increase and that discourages the demand for dollars; but if the (U.S.) Federal Reserve also increases its rates, that could stimulate the outflow of capital and thereby reduce the supply of dollars in the country,” explained Arias.

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