Costa Rica exchange rate to stay at ₡500 into 2013

first_imgThe flood of dollars into Costa Rica will accelerate in 2012 and 2013.Private sector direct investment in the country is at $1.5 billion for the first half of 2012, according to the Costa Rican Central Bank, and should easily top the target figure of $2.3 billion for 2012. But added to this will be approximately $2 billion in public sector financing, including $924 million in funds yet to be disbursed to the government and government entities under multilateral loans, and another $1 billion of Eurobonds recently approved by Costa Rica’s Legislative Assembly to refinance existing government debt and substitute lower interest rate dollar credit for more expensive colón-denominated government bonds.Some of these dollars will go to refinance existing dollar-denominated Costa Rican foreign debt and will not be changed into colones, but nearly all the foreign direct investment and some of the government Eurobond money will. The Central Bank administers the exchange rate using “bands”: floor and ceiling exchange rates that will trigger the Central Bank’s entering the exchange market to buy or sell dollars to maintain the rate between the bands. Currently, the irrelevant upper band exchange rate is set at ₡700 to the dollar, and the very relevant lower band at ₡500 to the dollar. Because there is an up to ₡10 spread between buy and sell rates, the lower buy rate can fall below 500. On Oct. 9, the Central Bank’s buy and sell rates were ₡492.39 and ₡503.11 per dollar, respectively.Dollars exchanged for colones put downward pressure on the exchange rate. The Central Bank, with dollar reserves of $4.86 billion, has approval to buy up to $1.5 billion to build up a bigger dollar reserve cushion. These dollar purchases also are very useful to defend the ₡500 to the dollar lower band exchange rate. Since September, the Central Bank has purchased $260 million under this facility. At this rate, the Central Bank would fill up its reserve increase target in about five months. After that, if the Central bank wants to keep buying more dollars, it would face a choice between further increasing its dollar reserves (and becoming a bigger creditor of the United States) or issuing colón bonds to buy back the colones it generates when it buys the dollars, to hold down inflation. This latter approach would be inflationary in itself, because the bonds would have to pay high colón interest rates, but less so than putting the colones into the economy.Six months into the future is a long time for exchange rate projections. There are too many economic wild cards – national and international – that make projections educated guesses at best. But it is clear that for the rest of 2012 and into 2013, pressure on the Costa Rican colón’s exchange rate versus the dollar will be downwards. The Central Bank can hold the ₡500 to the dollar exchange rate easily into 2013. But if nothing happens to reduce the flow of dollars into Costa Rica, that exchange rate could come under downward pressure next year, when the Central Bank and the country will have to either keep piling up dollar reserves or pay a colón inflation price to prevent the colón-dollar exchange rate from falling. Facebook Comments No related posts.last_img read more

Today Jim Justice chairmanowner of The Greenbri

first_imgToday, Jim Justice, chairman/owner of The Greenbrier, announced key plans for the new casino as the momentum at the resort continues to grow. Justice introduced the vice president of casino operations and unveiled the location for an interim casino. In addition, he shared preliminary schematics of the casinos design, as prepared by Shope Reno Wharton of South Norwalk, CT.“We are so excited about the plans for the new casino. It will be a truly spectacular facility, very elegant, and unlike anything anyone has seen before,” said Justice.Todd Fishon, a gaming industry leader with 23 years of experience, was introduced as vice president of casino operations for The Greenbrier. Fishon began his career at the Showboat Hotel and Casino in Atlantic City , New Jersey and opened Foxwoods Resort and Casino in Connecticut . Later, he joined Sol Casinos in Tucson , Arizona as director of operations.“We will integrate five-star service throughout the casino and resort, something that is very rare within the industry. Our guests are going to have an incredible experience, one that will set a new standard for luxury gaming destinations,” said Fishon.The award-winning architectural firm of Shope Reno Wharton, known for designing high-end homes and commercial projects such as libraries, museums and golf clubhouses, presented Justice and Fishon with ini­tial drawings on Tuesday. One of the key architects on the project is Michael Oliver McClung, a native of Lewisburg.The interior of the casino will be designed by Craig J. Smith and Christina H. Romann of C2 Limited De­sign Associates, who captured the rustic beauty of The Greenbrier Sporting Club Lodge and the classic ele­gance of The Greenbriers theatre corridor and North Entrance foyer. As recognized leaders in the luxury design market, they are known for their signature style of creating classic designs for the modern lifestyle.Justice plans to break ground on the casino in the near future, with an opening slated for April 1, 2010. In the meantime, Greenbrier guests and members will be able to enjoy this new amenity, including slot and table games, in a temporary venue, 38*80, a lounge in the resorts Virginia Wing. The facility’s projected opening date is September 15.www.greenbrier.comlast_img read more