Banco Central de Costa Rica

|/js/Menu_Izquierda_eng.htm

 

Exchange Rate Policy

 

The exchange rate policy is a part of economic policy consisting of a set of actions taken by the Banco Central seeking to make the exchange rate consistent with prevailing conditions in the Costa Rican exchange market and the evolution of the variables that determine this macro price in the long term.

 

As part of the transition towards a monetary policy using Inflation Targets, which requires greater exchange rate flexibility, the Board of Directors of the Banco Central de Costa Rica (BCCR), decided to migrate from an exchange rate band regime to a managed floating system, pursuant to Article 5 of session 5677-2015 of January 30, 2015.

 

Under the managed floating scheme, the exchange rate is defined by the market, but the Banco Central reserves the right to carry out intervention operations in the foreign currency exchange market to moderate strong exchange rate fluctuations and prevent exchange rates which deviate from those which are consistent with the behavior of variables that determine its medium- and long-term tendencies.

 

With the managed floating system in effect as of February 2, 2015, the BCCR:

 

a)     Will allow the exchange rate to be determined by foreign currency supply and demand, but the Bank will be able to participate in the exchange market to fulfill its own foreign currency requirements and those of the Non-banking public sector at its own discretion, to avoid extreme fluctuations in the exchange rate.

 

b)     May carry out direct operations or use foreign currency negotiation instruments it deems necessary pursuant to rules and regulations in effect.

 

c)     Will use the intervention rules defined by the Board of Directors of the BCCR in its transactions to stabilize the foreign currency market and limit extreme volatility during a day, or on a day-to-day basis.

 

d)     There is not a target or commitment to a particular exchange rate level.

 

 

Major Indicators
structure image
Banco Central de Costa Rica © 2016.