Central Bank Does Not Foresee Climb in Exchange RateThe Banco Central de Costa Rica (BCCR) - Central Bank - says it does not foresee a strong climb in the exchange rate in the short term as some financial institutions fear.

The dollar spiralled abruptly earlier this month against the Costa Rican colon when the Banco Nacional (BN) raised the exchange rate by ¢5 colones overnight and continued to climb to its highest level (¢527.82 for the buy) before the Central Bank intervened.

However, against the vision of the BCCR, the exchange rate could continue to climb, although slowly and according to financial experts, they are advising caution to anyone who is considering obtaining a loan in dollars.

"An exchange of ¢570 (the ceiling set by the BCCR) is unlikely and is way off balance", said Francisco de Paula Gutiérrez, president of the BCCR.

While some experts predict a rise in the exchange rate, others are predicting the level to remain where it is, saying that the conditions that existed at the beginning of the month are not now present and that the market overreacted.

One thing that the experts do agree on is for consumers to exercise prudence when considering obtaining a loan or investing.

In the opinion of Luis Liberman, head of Scotiabank in Costa Rica, the exchange rate will statibilize little by little and that Costa Ricans have not yet adapted to the change.

On the other hand, Liberman is predicting a rise in interest rates in the short term and is cautioning consumers to shop around for the best rate, especially in mortgages where commitments are long term. "One has to be prudent, not to say that people should not buy a house, but to really think of what to invest, based on their ability to pay and possible salary increases", said Liberman.