Tuesday 19 October 2021

Colon will not depreciate in 2021, according to specialists

Tourist flow and government work in structural changes will play a fundamental role in avoiding devaluation

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QCOSTARICA – What will happen to the dollar exchange rate in 2021? Will there be turbulence and uncertainty, or will there be relative calm?

Investors, exporters, debtors, and wage earners would enjoy a stable dollar, close to ¢600 colones, according to analysts consulted by La Republica, who warn that this will depend not only on external factors, but also on how the government faces the fiscal crisis.

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For example, you no longer see increases in the price of the currency exchange every day, especially since the multi-sector dialogue table was held, and, therefore, the issue of the dollar is no longer discussed with a negative connotation.

However, there are factors that should push this to happen and not repeat the price shot that was experienced in 2020.

Yes, improvements should be seen around the reduction of the deficit and the adjustment agreements are finalized, since this will remove fears that still exist, reducing the so-called “demand for dollars as a precaution”, considers Karla Arguedas, manager of Advisory & Strategy Prival Securities.

Otherwise, the country’s outlook would deteriorate, generating possible pressures for devaluation, warns Agatha Gutiérrez, an analyst at the Stock Market.

“The role of the Government will be important as long as it manages to approve new loans in dollars in the Legislative Assembly. The recovery in the flow of tourists will allow a recovery in the level of monetary reserves,” added Arguedas.

Expectations

Kara Arguedas: For 2021, the exchange rate will be adjusted for inflation, so the expected depreciation is 2%. During the year it will have the normal cyclical fluctuations that we are used to seeing, with reductions in times of arrival of dollars to the country and with increases when it is the opposite.

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Agatha Gutierrez, Stock market Analyst:  The exchange rate during 2021 would be determined by still uncertain factors. The recovery in economic activity could be accompanied by an improvement in confidence, which, accompanied by a greater inflow of foreign currency from exports and foreign direct investment, compared to 2020, would favor appreciation.

Daniel Suchar, Independent Economic analyst: 2021 will be marked by stabilization, I do not expect fluctuations above 620 colones, in the band between 580 and 600 colones, since the Central Bank has foreseen it. If there are abrupt fluctuations, it must be due to a specific phenomenon.

Read the original article, in Spanish, at La Republica.

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Reports by QCR staff

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