Currency Forecast - CRC: Gradual Depreciation Ahead - 01 AUG 2016

BMI View: The Costa Rican col o n will depreciate further in the months ahead, as policymakers look to improve export competitiveness. Nevertheless, the pace of weakening will be gradual given a high level of dollari s ation in the banking sector.

Short-Term Outlook (three-to-six months)

The Costa Rican colon will remain in a depreciatory trend through end-2016. The central bank's move to a lightly managed float in early 2015, from a currency band, has seen the unit begin to depreciate steadily in the last several quarters ( see ' CRC: Depreciation To Moderate ' , February 5 2015). We expect this trend to continue as policymakers seek to improve export competitiveness in order to stimulate economic growth.

Further Weakness To Come
Costa Rica - Exchange Rate, CRC/USD (Weekly)
Source: Bloomberg

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