18 June 2010

COSTA RICA: Currency Intervention Predicted As Colon Surges Vs USD.

  Central bank President Rodrigo Bolanos said he may intervene more frequently in the foreign-exchange market to reduce swings in the currency. The colon has surged 6.9% this year against the U.S. dollar, the second-best performance in the world after the Colombian peso. The colon is benefiting from the carry trade, where investors borrow in nations with low interest rates to buy higher-yielding assets. Costa Rica’s $29.4 billion economy will grow 3.8% this year, the second-fastest in Central America after Panama's 5% expansion, reports the IMF. GDP dropped 1.1% in 2009.