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The Central Bank of Costa Rica has had to increase its sale of dollars
in the wholesale market in order to regulate the rise of the exchange
rate. According to the Central Banks control policy, the price of
dollars can rise to a maximum limit of no more than ¢0.20 per working,
which on Friday was ¢565.45 to buy dollars and ¢500 to sell. When the
price of the dollar reaches the maximum limit in MONEX, the Central
bank sells dollars to avoid having an increase of more than the
established limit.MONEX, the Market of Foreign Currencies (Mercado de Monedas
Extranjeras), is the institution established by the Central Bank to
regulate banks, financiers, cooperatives, currency exchanges and stock
traders as well as commercial import and export companies that
negotiate the daily purchase and sale of dollars.In the week of January 26 to 30, the Central Bank sold $20 million and
in the previous week $36.5 million. In last the three weeks, the
organization sold an average of $18 million. When selling dollars, the
Central bank buys colones, which enables the institution to control
inflation, but diminishes its reserves in dollars.Since last January, when the Central Bank announced an increase in the
devaluation of the maximum limit of ¢0.06 to ¢0.20, the price of
dollars has tended to devaluate itself to the maximum rate of ¢0.20
per day. If the maximum rate continues as is, the exchange rate at the
end of 2009 would be near ¢614.Are there any economists out there who can explain why this is occurring
Ask five different tax experts what your taxable income is and you’ll get five different answers, same applies to economists – Let’s face it, they got EVERYTHING wrong with the current meltdown and they continue to do EVERYTHING wrong to try and remedy the situation.
But hey! Don’t worry! They’re not suffering and it’s not their money that’s paying the bill, it’s taxpayer’s money and taxpayer’s suffering!
With all the catastrophic financial news that’s out there, the strengthening dollar is indeed perplexing but what has not received the attention that is deserved is the current disconnect between the US$ and the price of gold. Take a peek at [ http://www.marketoracle.co.uk/Article8698.html ]
For those of you who want to check out the current Costa Rica colones:US$ exchange rate, please see the Costa Rica Central Bank website at: [ http://www.bccr.fi.cr/flat/bccr_flat.htm ]
PS. Last week the President of the Banco Central revised his estimate for economic growth in Costa Rica for 2009 down to 2.2% which means that A: Things are tougher than they first thought and B: I would suggest he’s still being optimistic.
In comparison, the IMF expected the US production to decline by -0.7% but according to January’s numbers will probably decline by -1.6%
Scott Oliver – Founder
WeLoveCostaRica.comScott, do believe the reason for the estimates almost always being more optimistic than warrants is due to false indicators or stupid economists..or perhaps are they due more to a propagandistic goal by politicians?
I suspect if people knew what to expect, there could very well be a great panic which would exacerbate the situation.
Edited on Feb 09, 2009 08:09
If the new immigration law is passed, there will be a lot less dollar and euro reserves to sell, which in turn will make it more difficult for CR to purchase foreign goods (heavy equipment, pharmaceuticals, technology, etc.).
Perhaps the folks in CR see that the dollar is headed for a fall and are looking to get out early… like a player in a ponzi scheme that KNOWS the real deal and jumps ship before the house of cards comes crashing down!!
I have to agree however that the recent rise in the dollar makes NO sense at all. Perhaps it’s just the fact that the world economy is in such a mess that even with all the bad moves made (and being made) in the US that the world is looking to the US as the safest/last to fall, hence the flow and confidence. Be that the case… the world should have run a credit report on Uncle Sam before making that move! Who knows!
Many years ago when a company was dropping employees it was bad news and the stock got hammered. In the 90’s/early 2000’s when a company announced a major lay-off the stock went up! That whole “lean and mean” attitude for failing companies! It all makes no sense. As Scott pointed out, there’s so many different views/opinions these days that the only true test of the integrity of these positions is a rear view mirror look at who was right… but by then it’s too late if you’ve followed the wrong path!
Ignorance is bliss they say… and thankfully there’s a whole world out there that’s quite blissful (be they a bit unsettled and getting worse by the day)… otherwise there would be widespread panic! Something I see as a REAL possibility in the next year or two. (There’s my opinion! LOL)
As to the new immigration proposals… perhaps the new $2000 requirement is intended to address the future reality that this amount will have the same buying power as $600 does today! Pretty scary world, a stockpile of canned tuna is looking better and better!
Edited on Feb 09, 2009 08:46
The economic estimates are always a combination of deceit, sometimes intelligent guesses and as we have clearly seen – also plain stupidity and yes! I would agree, if the ‘people in the street’ truly understood the scope of this problem we really would be in bad shape but, like lemmings, we all rush towards the edge of the cliff thinking that the government is smart enough to be able to rescue us….
But if “past performance” is anything to go by, why do we believe one word that comes out of the mouths of these economic and political ‘experts’?
Check out [ http://www.shadowstats.com/alternate_data ] for some interesting economic data …
As for the new immigration law affecting us (if it passes exactly as it has been proposed), I don’t believe that as far as the Costa Rican economy is concerned, that retired expats are nearly as important as we think they are.
I believe the number of real estate sales to expats planning on retiring here is actually a much smaller number than we imagine and when it comes to the US dollars that really matter to Costa Rica, then surely we’re talking about Intel, Proctor & Gamble, Western Union, Amazon.com and other major corporations? These proposed immigration changes will not really affect them at all….
Scott Oliver – Founder
WeLoveCostaRica.comPS. I prefer cans of salmon, does that mean my purchasing power will be better or worse than those of you with cans of tuna?
Has it occured to anyone that maybe the reason for the mysterious fluctuations in the $/ Colon exchange rate may be due to manipulation by some big players in the Costa Rican marketplace? In the later part of 2008 the colon strangely became stronger against the $ and the reasones given were that businesses were selling off their $s to pay “aguinaldos” and taxes. Did this only happen in 2008? I can’t remember this happening in other years. Normally, in other years there is a shortage of $s to finance year end shoppping. A relatively small amount of influx can have a big effect on the local market. A 2 or3% swing in a weeks time is a decent return.
Forget about stockpiling salmon or tuna. Liquidate anything you’ve got that will fit into a carry on bag and move while you still can.
According to Uncle Barack, nobody should be listening to anyone except his new gang of tax dodging democrats. President Obama warned Republicans on Capitol Hill that they need to quit listening to radio king Rush Limbaugh if they want to get along with Democrats and the new administration. “You can’t just listen to Rush Limbaugh and get things done,” he told top GOP leaders, whom he had invited to the White House to discuss his nearly $1 trillion stimulus package.
http://www.nypost.com/seven/01232009/news/politics/prez_zings_gop_foe_in_a_timulating_talk_151572.htm and http://www.foxnews.com/politics/2009/01/23/obama-quit-listening-rush-limbaugh-want-things
The writing is in CAP’S on the walls.
Did not Castro and Chaves remove freedom of speech in their personalized forms of governing?No, chromebuilder, Castro and Chavez did NOT remove free speech and neither is using a “personalized” form of governing. Both are following established progressive ideologies and applying established methods of socialized forms of government. You must be drinking the Kool Aid that Rush Limbaugh has been passing out for the last 10 years.
If you think his ideas are so good, perhaps you would like to blame the current mess on progressives who haven’t has a single bit of influence in the States for a long long time.
Today’s problems surely couldn’t have anything to do with Republican legislative dominance for the last 15 years, could it? It must be those rascally Caribbean commies who have brought down our great economy with all their silly ideas of promoting the working class and making a more eglatarian society.
Those who have created the laws, ignored oversight and promoted the wealthy getting wealthier at the expense of the rest of the country and have brought the world economy to the brink of catastrophe. They have lost their credibiltiy and should no longer be in the business of giving the rest of us advice.
Edited on Feb 09, 2009 10:43
Edited on Feb 09, 2009 10:44
Ahhh Sprite… where to begin? Egalitarianism is an ideal to be upheld, but in the US, the big lie that has been spoon-fed to the masses for decades is that they can have it all. The ever-expanding supply of credit has given us bubble after bubble.Wipe-out, again and again… But the fish, with their ever short memories, keep on swimming.
Simply put, our constitution guarantees equal opportunity, not equal results. Obama and his minions have all but certified that the only thing the masses will experience is equal misery, while he passes out billions of USD to every left-minded outstretched palm as “stimulus”. Meanwhile, the small business guy (yeah, me), the engine of real growth and prosperity in the US, along with the 48% of productive Americans that actually pay income taxes, gets the bill.
And if it’s the “progressives” that are going to save us all, why hasn’t there been a single congressional hearing as to who the real players were that caused this latest debacle, and who were their enablers in congress since the 2006 elections?
And BTW, you’re awfully fond of bashing republicans, but it was none other than the Eeeeeevil GWB who introduced a measure in 2003 to stem the tide of monetary crapola that was being flung about by Fannie Mae & Freddie Mac, only to be shouted down by such visionary “progressives” as Barney Frank & Christopher Dodd. “Nothing to see here; just move along!” No one is so blind as those who will not see.
Faith in government is for fools and knaves.
Edited on Feb 09, 2009 14:08
In prior years you had a set and fixed rate of exchange that was slowly adjusted by the CR government. We watched as the colon/dollar rate went from 300/1 to about 500/1, adjusted at a fixed rate each day. Then they came up with this exchange rate band system we see today. It’s sort of still being figured out as we go forward. The change over the last two months of 2008 was quite a bit. I had thought there might be some games being play, and perhaps there was some manipulation, but the Christmas bonus idea does make some sense. I guess we’ll have to wait and see what happens this year! That is if we make it to Christmas!
PS. Scott… we’ll have to work on the exchange rate between tuna and the pink stuff you’re eating! All part of the new world order! LOL
Edited on Feb 09, 2009 14:01
How is the supply of soylent green holding up down there? Here in Jacksonville, FL all the markets are out.
I just love watching you guys try to wiggle out of taking the blame for this catastrophe. You want to blame the recently elected democratic congress for our current mess. What a stretch. What an imagination.
I guess I can agree with you on one thing, though. “But the fish, with their ever short memories, keep on swimming.” In other words, they keep on electing politicians like Bush and Reagan and their destructive ideaology right up to the bitter end. It is too late to fix this now.
This catastrophe has been in the works since “they” created the Federal Reserve, and every US president since has kow-tow’d to the Fed. Including Obama. The USD fiat money system is coming close to destruction, like all previous historic attempts at spending your way out out of a spending mess.
“We contend that for a nation to tax itself into prosperity is like a man standing in a
bucket and trying to lift himself up by the handle.” – Winston ChurchillEdited on Feb 09, 2009 15:26
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