COSTA RICA BUSINESS NEWS – In the first week of the managed float, Central Bank (Banco Central de Costa Rica – BCCR) authorities observed a varied behaviour in the exchange market: participants trading only with financial institutions, were demanding more dollars, while participants in the Mercado de Monedas Extranjeras (Monex) were reserved.
That was one of the three possible scenarios expected by the BCCR in the first days of operation of the new system for the purchase and sale of U.S. currency in the country.
The other two scenarios expected by the BCCR was a general decline in the demand for dollars; the third, most similar to what occurred, a mixed performance with increases and decreases in demand, explained Roger Madrigal, director of economics at the BCCR.
“We considered it most probable that people in general, who are not in the business environment, were to think that the exchange rate was going to go up,” said Madrigal.
Madrigal confirmed that indeed that is what happened, people went to the banks to demand dollars, causing an upward pressure on the value of the currency.
However, exchange agents (banks, mutuals, cooperatives, brokerage houses) had a contrary expectation: a decline in the exchange rate.
Last week (Feb. 2 to 6), the Central Bank intervened with sales of US$52 million dollars in the Monex, to keep the exchange rate from rising. At the end of the week, the increase in the exchange was ¢2.16 colones per dollar.
On Monday, February 9, the Central Bank intervened with another US$5.7 million dollars on a trades of US$12.6 million.