CRC: IMF To The Rescue

The Costa Rican colon will trade at the floor of its prescribed exchange rate band over the coming months, which, in turn, will continue to widen by 20 centavos (CRC0.20) per trading day. An acute recession, twin shortfalls on the fiscal and current accounts, and a drying up of foreign exchange inflows are the main reasons why the currency will remain firmly offered. On this basis, we are pencilling in an FX target of CRC598.50/US$ by end-2009.

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