By Adam Williams
Costa Rica’s central bank is buying dollars at the fastest pace in three months after foreign companies brought in cash to pay workers, not because of a return of speculative capital to the country, according to brokerage Aldesa Puesto de Bolsa.
Costa Rica’s central bank bought $41.5 million this week through yesterday, the most since May 17. Dollar purchases have exceeded $750 million this year as policy makers try to rein in the colon, which has led Latin American and Caribbean currencies with a 2 percent gain against the dollar this year.
President Laura Chinchilla, who called speculative capital a “weapon of mass destruction,” backed legislation Congress has yet to take up that would raise reserve requirements on foreign investors and boost taxes on interest paid to them to dissuade some inflows. This week’s rise in dollar purchases is probably not related to speculative capital but wage payments, said Adriana Rodriguez, head of investment strategy at Aldesa.
“The national interest rates remain very low, so it doesn’t make much sense that this is a return of speculative capital when there are larger returns available in other emerging market countries,” Rodriguez said in an interview.
Costa Rica’s basic interest rate fell to 6.55 percent this month from 9.2 percent at the start of the year.
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