Wednesday 27 January 2021

Intervention in the Foreign Exchange Market

With the aim of cushioning the fall in the price of the U.S. dollar exchange, which between November 5 and 25 was reduced in ¢18,35, in just two days the Banco Central (Central Bank) intervened buying more than US$30 million.

Of the US$41.5 million negotiated at Monex during the November 22 session, the Central Bank purchased US$36 million, and of the US$30.7 million negotiated on November 25, the monetary authority acquired US$27 million.

This is the Central Bank’s response to the accelerated fall in the exchange rate, a situation that has been influenced to a great extent by the US$1.5 billion income from the recent Eurobond issue.

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Central Bank data shows a clear downward trend in recent weeks, as between November 5 and 25 the price has fallen from ¢585.52 to ¢567.17, equivalent to a variation of 3%. See full figures.

On Tuesday, November 26, currency trading in the Foreign Currency Market (Monex) reached US$68.8 million, among the highest figures negotiated since 2014, only surpassed by a negotiation in June 2017 for US$75.9 million.

The strategy of the Central Bank is to intervene through operations with the Sector Público No Bancario (SPNB) – non-banking public sector – to influence the behavior of the price of the dollar.

“The appreciation of the colon against the dollars is a relief for the debtors in dollars that receive income in colones, but it affects the competitiveness of the country since it becomes more expensive for the foreign tourists and also increases relatively the value of the products of exportation,” reports La Nacion.

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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.

Q Costa Rica
Reports by QCR staff

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