Costa Rica´s exchange rate continued its pattern of erratic behavior on Tuesday, as the value of the colón appreciated over 13 colons against the U.S. dollar. On Tuesday the buy value of the exchange rate was ¢ 523.05 per $1, down from the ¢ 536.72 per $1 buy value on Monday. The 13-colón fall in the exchange rate was the largest single-day movement since Nov. 23, 2007, when the colón appreciated ¢ 20.
In the first two and a half months of 2010, the exchange rate has fallen from a buy value of ¢ 558 per $1 in January to Tuesday´s buy value of ¢ 523 per $1, the lowest figure registered since July 15, 2008. Since August 2009, the colón has appreciated over ¢ 60 against the U.S. dollar.
In an interview with The Tico Times last week, the President of the Central Bank of Costa Rica, Francisco de Paula Gútierrez, explained the recent fluctuations in the exchange rate and appreciation of the colón.
“There is more supply than demand,” he said. “In the buy and sell bands system, the supply side is driven by exports, by tourism and by the movement of capital. The demand side is driven by the level of imports and the payment of debts and taxes. During the latter part of last year and the early part of this year, the country is experiencing a little more supply than demand and that is what is causing the current situation in the bands and the exchange rate.”
Over the course of the final three hours of the work day, from 2p.m. to 5p.m., the Central Bank observes the market activity and financial movements of each day. The supply and demand of dollars and colones ultimately determines the exchange rate for the following day.
For more of the interview with the Central Bank President Francisco de Paula Gútierrez, see the March 19 print or digital edition of The Tico Times.