UCR says heavy exchange rate intervention is troublesome

QCOSTARICA – The Institute for Research in Economic Sciences of the University of Costa Rica (IICE-UCR) has mentioned that it is not recommended that the Central Bank of Costa Rica (BCCR) carry out strong interventions on the rate exchange, even if it has sufficient reserves to do so.

According to experts from the state university, the Central Bank should intervene only in case of sudden changes in the foreign exchange market. They assure that the recent rises in the exchange rate will continue slowly.

Read more: Central Bank contradicts Chaves on dollar reserves

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Juan Robalino, director of the IICE, said that the central bank’s task should be limited to avoiding instability in the foreign exchange market (MONEX).

Robalino pointed out that the current inflation largely responds to a sharp increase in demand and a decrease in the supply of key goods and services for production, linked to global economic conditions.

This Thursday, the reference exchange rate for the dollar by the Central Bank is 676.06¢ for buying and 681.81¢ for selling. In commercial banks, the sell rate is quoted between ¢684 and ¢686.

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