Central banker to explain exchange rate

The chief economist at the Banco Central will talk to Democrats Saturday about the bank’s exchange rate policy.

The U.S. dollar has strengthened against the world’s major currencies, but the Costa Rican colon is now trading at a rate that is slightly lower than a year ago.

The buy/sell rate today is 526.44/538.86 colons, some four colons lower than a year ago.

The speaker is Roger Madrigal López.

Central bank officials have maintained in the past that it has been supporting the U.S. dollar.

The bank gained more control of the currency exchange market when it prohibited individuals from buying and selling currency.  Now only banks participate in the daily monetary market.

The exchange rate is of  importance to expats because many receive funds from outside the country. They have been mystified by some recent changes.

For example, the Banco de Costa Rica decided to limit the emissions of dollars at its automatic tellers. Banco Nacional did this some time ago.

The actions raised the suspicions of expats that the move was designed to protect the colon.

Just this week, another expat reported that Banco Nacional declined to accept a wire transfer for a large sum destined for a property transaction.

The colon will come under more pressure when the U.S. Federal Reserve finally decides to raise the base interest rate.

For now one beneficiary of the exchange rate is the central government which collects taxes and other funds in colons but has to pay for its crushing international debt in dollars.

The Democrats Abroad meet at 9:30 a.m. Saturday at the Holiday Inn Aurola in downtown San Jose.    Reservations are requested at DemocratsAbroadCostaRica@gmail.com

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