This is not good news for Costa Rica. While the US dollar we use here in Panama may not be as strong as it should be, I would not want to holding Colones right now.
With Central Bank interventions having already exceed $100 million, on Thursday 27 February the dollar was quoted at 560 colones at bank counters.
There have now been four consecutive interventions by the Central Bank of Costa Rica (BCCR) to support the price of a dollar in the wholesale market in a week.
The exchange rate at the bank counters was quoted between 500 and 560 colones on Thursday, 27.
“In the last four days, the exchange rate has increased by almost 14 ¢, accumulating an increase of ¢49.13 since mid-January.”
“The Costa Rican Banking Association reiterates its concern about speculation in the foreign exchange market and reiterated on Thursday that the devaluation of the colon, nearly 10% within 45 days, has been excessive.”
“We are deeply concerned that speculative processes are overinflating the devaluation of the colon. These behaviors could lead to a spiral of rate increases and expectations of further devaluation, which would be very harmful to the stability and growth of the Costa Rican economy. ”
“The BCCR has been the subject of criticism because of its actions in relation to the behavior of the exchange rate, and has asserted transparency of its actions and in making sound decisions under appropriate advice and information.”
Source: Nacion.com
No, the US dollar is not what it used to be; but still better than the colone ( “the least dirty shirt” syndrome ).
If Panama were to succumb to the temptation to have a central bank, and began to print Balboas, then
we will be in the same predicament!