Q COSTA RICA — The dollar exchange rate in Costa Rica could face renewed downward pressure during the final months of 2026, driven by an increase in foreign currency availability linked to year-end payouts—such as mandatory holiday bonuses—known as “aguinaldos” in Spanish—and performance bonuses—as well as typical corporate year-end transactions, according to the Universidad Estatal a Distancia (UNED).
Federico Quesada, Director of the university’s School of Administration Sciences (ECA), noted that the foreign exchange market warrants close monitoring starting in late October and early November, when seasonal foreign currency movements begin to intensify.
This warning comes at a time when the Central Bank of Costa Rica (BCCR) holds reserve assets exceeding US$20 billion, according to data released by the university.
The academic explained that, while the outlook suggests a degree of exchange rate stability through the end of the year, there is a possibility of further declines in the value of the US dollar against the colón.
These factors are compounded by inventory liquidation, holiday shopping, and other financial activities undertaken by companies during the final quarter.
The specialist clarified that this scenario involves potential exchange rate pressures rather than a guaranteed drop in the dollar’s value.
Tourism and exports could face further consequences
Any further drop in the dollar would have varying effects on different sectors of the Costa Rican economy.
While a cheaper US dollar can benefit those needing to purchase foreign currency to pay for imports, travel, or dollar-denominated financial obligations, it can also pose challenges for companies that generate revenue in foreign currency but incur expenses in colones.
Quesada identified tourism, exports, and companies linked to foreign investment as sectors particularly exposed to exchange rate fluctuations. The problem for these companies is that they receive fewer colones for every dollar of revenue, while maintaining obligations—such as salaries, rent, and utilities—in the local currency.
For example, a company receiving US$100,000 would obtain ¢45 million colones at the current exchange rate of ¢450 per dollar. If the rate were to drop to ¢440, that same revenue would amount to ¢44 million—a loss of ¢1 million—without any necessary decline in sales volume.
This discrepancy can impact operating budgets, profit margins, and the companies’ ability to meet their financial obligations.
The director of the ECA maintained that the discussion should not focus solely on how much the exchange rate might fall, given that some productive sectors are already grappling with the consequences of a weaker dollar.
This warning is particularly relevant as the year-end season approaches—a time when many companies must make extraordinary payments and adjust their financial projections.
Three measures proposed by the specialist to contain exchange rate pressure
In light of the potential for an increased supply of dollars in the Costa Rican market, Quesada outlined three options that could be considered as part of the monetary policy discussion.
The proposals involve adjustments to reserve requirements and potential decisions regarding the Monetary Policy Rate (TPM)—instruments managed by the Central Bank of Costa Rica.
The alternatives mentioned by Federico Quesada are:
- Increasing the reserve requirement for dollar-denominated funds: this measure would reduce the availability of US currency within the financial system by requiring institutions to hold a larger proportion of certain funds as reserves.
- Reducing the reserve requirement for colón-denominated funds: this would ease restrictions on the availability of the national currency and could foster greater demand for foreign currency.
- Lowering the Tasa de Política Monetaria (TPM)—Monetary Policy Rate: a reduction in this rate, currently set at 3%, could diminish the relative incentive to hold funds in colones, particularly in a scenario of very low inflation.
The specialist emphasized that any modification must take into account potential consequences for other economic variables, as well as the Central Bank’s legal mandate and independence.
These measures are alternatives proposed for analysis rather than decisions announced by the monetary authority.
Would extending MONEX trading hours help drive up the dollar?
Another aspect examined by the director of the School of Administration Sciences is the operation of the Mercado de Monedas Extranjeras (MONEX)—Foreign Currency Market, a platform where currency exchange transactions take place between authorized participants.
Quesada explained that a potential extension of trading hours could allow more supply and demand signals to be reflected within a single trading day.
However, he cautioned that this change would not necessarily lead to an increase in the price of the US currency.
The specialist noted that, just as there could be transactions pushing the exchange rate upward, there is also the possibility of increased downward pressure.
For this reason, extending market hours does not guarantee that the dollar will regain value against the colón.
New Eurobonds could add pressure to the exchange rate
In addition to the seasonal movements expected for the final quarter, UNED identified another variable that could influence exchange rate behavior: the potential issuance of new Eurobonds by Costa Rica, whose primary goal is debt optimization—exchanging high-interest, short-term domestic debt for cheaper, longer-term international debt.
These instruments allow the country to secure financing by issuing debt securities in international markets.
If the government obtains new dollar-denominated funds and subsequently converts them into colones in the local market, the supply of foreign currency could increase, potentially driving its value down.
The effect will depend on, among other factors, the amount of funds obtained, the timing of their use, and how they are managed.
Quesada considered it essential to define the intended use of such financing beforehand and suggested that investment in infrastructure should be prioritized.
He explained that directing funds toward public works would allow part of the debt to be transformed into projects capable of improving the country’s productive conditions and competitiveness, while seeking to mitigate the impact on the local foreign exchange market.
This warning does not imply that a placement has been confirmed, nor that all funds raised through Eurobonds must be immediately converted into colones.
Recommendations for businesses and consumers as the year-end approaches
Amidst uncertainty regarding exchange rates, Quesada advised companies that rely on dollar-denominated revenue to review their budgets and projections for the coming months.
This recommendation is aimed particularly at companies that receive foreign currency but incur a significant portion of their operating costs in colones.
For consumers, Quesada emphasized the importance of avoiding unnecessary exposure to future exchange rate fluctuations.
His primary recommendation is to keep debts in the same currency in which income is received, in order to mitigate risks associated with unexpected exchange rate movements.