Costa Rica buys $50 million a month to curb rally

Costa Rica’s central bank plans to buy as much as $50 million a month in the foreign-exchange market in a move that analysts say is a bid to stem a rally that’s sent the colon to a two-year high.

 

The colon has surged 7 percent in the past three months and touched 504.75 per dollar on Aug. 31, leaving it within 1 percent of the stronger end of the 500-to-645 band that the central bank seeks to keep the exchange rate.

 

The colon weakened 0.4 percent to 508.27 today, its biggest slide in six weeks, after the bank said in the statement that it will buy up to $600 million in the market by December 2011.

 

Original source: Bloomberg