Costa Rica has experienced huge surges of foreign capital...because of its high 9.05% benchmark interest rate.
Now...its congress wants to slow the flow...because the capital flood threatens its currency...the colon.
Even unpopular President Laura Chinchilla stated that investors had turned 'capital into real weapons of mass destruction.'
Congress is looking at a huge tax increase for foreign investors on sovereign bonds.
The current surcharge is 8%.
An additional 25% is being discussed.
The central bank has also been buying dollars recently.
Today...the colon was trading at 497.29 per usd.
NEW!! FinMin Ayala announced that the interest rate on cash in banks...will be dropped from 9.2%...to 8.5%.