Defensoría wants to see system for exchange rates

The Defensoría de los Habitantes has launched a probe into the fluctuating exchange rate between the Costa Rican colon and the U.S. dollar.

The independent ombudsman agency said it has asked the Banco Central to provide information on this system that went into effect in 2006.

Until then, the Banco Central set the daily exchange rate with a tiny daily devaluation. The value of the dollar against the colon has fallen 15 percent in a year because the market now sets the exchange rate.

The Banco Central merely maintains the range in which the dollar is allowed to fluctuate. The floor now is 500 colons, although the buy rate for colons had dipped below this slightly before Christmas.

The Defensoría said it wanted to get into the technicalities of the exchange rate range. It said it wanted to protect against significant fluctuations in the value of the dollar versus the colon.

The Defensoría also said that it was seeking information from the Superintendencia General de Seguros about any proposals to register insurance products that would protect against changes in the exchange rate. Costa Rica does not have an effective futures market for money, although persons handling quantities of dollars could hedge their income by making investments in U.S. commodity markets. Eventually the Defensoría will issue a report on its findings.

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