by Rod Hughes

The Central Bank dumped dollars on the money market for the second time in two weeks to try to halt the artificial rise of the U.S. dollar in the exchange of colones. The colon reached ¢527.85 per dollar yesterday, an all-time record. The colon rollercoaster is blamed on exchange speculators.

“When the dollar dropped, a lot of people changed their colones and now they’re converting to dollars again. But this isn’t good because if the dollar drops again, they can lose money,” cautioned Guillermo Quesada, manager of Bancrédito. The wild fluction began late last year when the Central Bank set the colon at the high 480s per dollar. But in the past two months that devaluation of the dollar exchange has been reversed.

Fortunately, the Central Bank has a healthy dollar reserve to use to stabilize things. And, with the prices of petroum rising to record highs of $120 plus per barrel, what has gone up recently is sure to fall. The exchange rate is related to inflation and rising food prices has already hit hard at the poor of Costa Rica, as it has in many other countries.

Central Bank president Francisco de Paula Gutiérrez also warned investors not to rush to exchange their savings based on temporary blips in the money market.

In other banking news, Banco de Costa Rica, one of the country’s oldest public banks, elected a new president, Luis Carlos Delgado, to replace Victor Emilio Hererra whose term expires June 1. Hererra admitted to the daily La Nación that he threw his support to Delgado. Others on the board are Percival Kelso, Roland Chacón, Alcides Calvo, Leonardo Ferris and Pablo Ureña.