The board of directors of the Central Bank approved the use of a series of tools that would help stabilize the exchange rate of the dollar and alleviate the excess demand for foreign currency from companies and individuals.
In the first case, it will try to better control the liquidity (amount of money in the economy) by means of the guideline rate.
We have tried to restore the prize for saving in colones, and for that the Monetary Policy rate increased. (…) But there is a slow transition of these changes towards interest rates (…) That is why we have considered looking for some mechanism to accelerate this process. That is why we have rehabilitated the Central Directo platform, the possibility of attracting funds from the public in an agile way,”
said Olivier Castro, president of the Central Bank.
The board also approved a daily auction of dollars in a schedule prior to the start of the Foreign Currency market (Monex). Only banks or other exchange intermediaries explicitly authorized by the Central Bank may participate.
As a last step, the Bank approved a methodology for the new calculation of the reference exchange rate, which would be in force next month.
These tools add up to the “inter-day” interventions announced at the end of May.
Despite recent strong movements in the exchange rate and the constant intervention of the Central Bank in the Monex market, the Central Bank defends present value as an “equilibrium price”.
We believe that the level of the exchange rate is in equilibrium. The representatives of the International Monetary Fund agree… There are no imbalances to justify the movements we had in the exchange rate in recent days,”
said Castro.
The monetary authority insists on an increase in the level of imports and savings in foreign currency, which affects demand and therefore pushes up the exchange rate.
Under this argument, the entity justifies the constant exchange rate intervention, which has slowed the volatility in daily quotes.
Castro says he is aware that these increases compromise the inflation target that is the Bank’s greatest commitment. It also deteriorates the relationship between domestic and foreign currency rates.
The imbalances in the foreign exchange market are related to people’s perception that the country will not be able to solve the problem of the fiscal deficit,”
insisted the man.