QCOSTARICA — The dollar exchange rate started the week on the rise, with one of the most significant increases since 2022, when the constant process of devaluation of the dollar began.
While the Banco Central de Costa Rica – Central Bank of Costa Rica (BCCR) maintains its rhetorical explanation that the low values recorded by the US dollar (and the consequent appreciation of the colon) respond to market forces of supply and demand, the president of the bank, Roger Madrigal, says that it is uncertain why the dollar exchange rate rose during the last three sessions of the Mercado de Monedas Extranjeras (Monex) – Foreign Currency Market.
“It is very difficult to know but it is consistent with the exchange rate regime (…) It is not a cause for alarm that the exchange rate in the last week has risen 1.8%, it is normal,” commented Madrigal.
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In recent days the average value went from ¢503.10 to ¢510.49.
Madrigal explained that given the current interest rates and savings premiums in different currencies, some individuals may find it beneficial to switch their savings from colones to dollars.
However, Madrigal states that there is no proof that the Tasa de Política Monetaria (TPM) – Monetary Policy Rate – level directly impacts the exchange rate. Madrigal suggested that individuals may calculate which currency offers the lowest yield, potentially affecting demand. He noted that similar instances have occurred in Costa Rica, with the most recent in 2022.
Read more: Has the time come to dollarize Costa Rica’s economy?
Last week, the Central Bank reduced the MPR to 4.75%, which places it below the rates established by the US Federal Reserve (FED).
Madrigal notes that this year there has been a trend towards saving in dollars, but the transition has been smooth and has not caused any sudden disruptions in the currency exchange market.
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