Saturday 15 May 2021

Why did the dollar exchange rate rise in recent days?

On August 31, the sell price of the U.S. dollar was quoted between ¢ 580 and ¢ 585

The national and state banks posted an exchange rate of between ¢580 and ¢585, on the afternoon of August 31, for one US dollar.

Today, Tuesday, September 4, the sell rate at the Banco de Costa Rica (BCR) and Banco Nacional (BN) was ¢588 and ¢587, respectively. Private banks posted similar rates.

The exchange rate set by the Banco Central (BCCR) – Central Bank – for Wednesday, Sept. 5 is ¢585.15, up ¢11.99 from the ¢573.16 set last Wednesday (Aug. 29)

- Advertisement -

These movements are not sudden. Some sessions ago on the Mercado de Monedas Extranjeras (Monex), the currency market began to shake and even required the sale of dollars, for stabilization, by the BCCR.

The Central Bank sold about US$39 million in just two days of the week (August 29 and 31), after a period of six months of relative tranquility.

According to the experts, the behavior of the dollar price is based on several factors.

First, we must bear in mind that August presents a “seasonality” each year. In this month the exchange rate tends to increase, a behavior that also occurs in December. In September, the next month, the exchange rate tends to decrease due to the payment of taxes.

- Advertisement -

Second, there is the dynamics of the foreign exchange market, fostered by the fiscal deficit. The banks have surplus dollars. In other words, there has not been so much pressure because of the low demand for foreign currency, since they have bought more dollars from the public than they sell.

The third reason goes beyond the supply and demand, it is a regulatory change. Since June, the BCCR incorporated a commission of 0.7% for each transaction. To avoid that cost, recently some financial institutions have begun to buy and sell among themselves, explained Emmanuel Agüero, a specialist in economic analysis of Aldesa.

This has caused the market to be illiquid and some large buyers have had to take the price given to them.

The fourth factor that would be affecting is the message of the Central Bank. The changes could be a reflection of the desire for greater flexibility of the exchange rate, which has manifested Rodrigo Cubero, president of the Central Bank, since he took office on August 1, explained the economist Alberto Franco.

“We are going to have an exchange rate that moves more, that fluctuates more,” said the bank president in a statement.

The market could be testing how much volatility the monetary authority will allow. The president of the BCCR has been clear in saying that he will not allow abrupt movements of the dollar either since he recognizes that this could translate into a risk since it is such a dollarized economy.

- Advertisement -

The fifth explanation for the recent movement in the price of the dollar is the decrease in the premium for investing in colones.

This has happened mainly in the short term, explained Franco. The level of US interest rates has increased and with that, the attractiveness of investing in national currency has fallen.

Source (in Spanish): El Financiero

- Advertisement -

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.

Related Articles

Central Bank intervenes to remove upward pressure on dollar exchange rate

QCOSTARICA - The Banco Central (Central Bank) increased its presence in...

Interventions by the Central Bank will be key so that Colon does not depreciate this yea

QCOSTARICA - The notorious influence of the Central Bank (Banco Central)...

MOST READ

Government does not plan to announce expansion of restrictive measures

QCOSTARICA - The Government of Carlos Alvarado confirmed on Friday that it does not plan to announce the expansion of the restrictive measures that...

Costa Rica will buy two million more doses to accelerate vaccination

QCOSTARICA - The President of the Comision Nacional de Emergencias (CNE), Alexander Solis, announced this Monday afternoon that Costa Rica is purchasing an additional...

27-year-old connected to an ‘artificial lung’ for 111 days after infected with covid-19

QCOSTARICA - In contrast to the belief that only the old get deadly sick after being infected with covid-19, a 27-year-old old and a...

Covid vaccine passport, salvation or division?

EL UNIVERSAL Washington / Brussels - The desperation to reactivate economies, in the midst of the coronavirus pandemic, has prompted an idea: to create...

Costa Rica receives the largest shipments of vaccine in one week: 212,820 doses

QCOSTARICA - The landing of two separate and independent shipments of covid-19 vaccines this week, one from Pfizer and the other from Astra Zeneca,...

Cuba Ready to Join WHO-Led COVAX Facility, Ambassador to China Says

Q24N   - Cuba is ready to join the COVAX vaccine-sharing mechanism led by the World Health Organization (WHO), the Latin American country's ambassador to...

Health expands group 3 vaccination for people from 16 to 58 years

QCOSTARICA - Adolescents of 16 and 17 years old with some risk factor in case of falling ill with covid-19 will be part of...

3,173 new cases of covid-19 in the last 24 hours; 26 deaths

QCOSTARICA - The country registered a new record of covid-19 infections this Wednesday, reaching 3,173 confirmed cases in a period of 24 hours. The figure...

Three thousand hospitalized by the end of May, UCR projects

QCOSTARICA - On Monday, the Ministry of Health reported 1,280 people in hospital with covid-19, of which 466 of them in an ICU, aged...

WANT TO STAY UP TO DATE WITH THE LATEST!

Get our daily newsletter with the latest posts directly in your mailbox. Click on the subscribe and fill out the form. It's that simple!

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.