Want to hedge your bet on dollars? Try futures

Financial experts told business leaders that there is too much uncertainty to predict the financial future.

The session in the Hotel Intercontinental was designed to discuss the exchange rate that has seen the U.S. dollar climb more than 11 percent in value since the first of February.

Although the future cannot be predicted, the dollar most likely will continue to be volatile against the Costa Rican colon and business operators, mainly importers and exporters, need to consider their options, those who attended were told. The session was sponsored by the Cámara de Industria y Comercio Costa Rica-México

One of the speakers was Bernardo Alfaro, deputy manager of finance and risk for the Banco Nacional.  He noted that a change of government complicates predictions because the objectives of the Banco Central are likely to change, and the dollar may be allowed to float or there may even be an effort to dollarize the economy.

The Banco Central buys dollars every day to meet the needs of public institutions. It also can intervene in the public Monex market to protect the value of the dollar or the colon, as needed.

The dollar is subject to local pressures and also those stemming from the international situation, the session was told.

Alfaro also noted that to protect themselves from exchange rate volatility, business operators can purchase several types of contracts that lock in the value of the dollar at a future point in time. Banco Nacional has been handling such financial products, called derivados cambiarios, since November 2012.

Those who have a need for dollars at a fixed future time can negotiate now for a favorable exchange rate, the business operators were told. The local market can accommodate colons, which international future trading does not do.

The dollar rose slightly in trading Monday, but the Banco Central did not have to give financial support to either currency. The central bank did, however, buy $12 million for public needs. An additional amount, nearly $13 million, was traded among private entities. The average cost of dollar on the Monex exchange Monday was 549,70  colons, a bit less than the 553.63 quoted as the official rate Monday by the central bank.

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