Saturday 19 June 2021

Economists Predict Increases In Exchange Rate Will Trigger Inflation

Increases in the price of fuel, electricity, local production and imported goods caused by the changes in the exchange will cause inflation to skyrocket in the coming months, is the belief of financial experts who are keeping a close eye on the actions of the Central Bank.

Dollars“It’s very difficult for the Banco Central de Costa Rica (BCCR) – Central Bank – to maintain its goal for the year, keeping inflation at between 3% and 5%”, economist Ronulfo Jimenez, told

Other financial experts have the same opinion, there will be a serious effect on the cost of goods and services that affect inflation, that affects the poorest families in the country.

- Advertisement -

The Central Bank has injected almost US$100 million dollars in the past week to avoid a sharp increase in the exchange rate, that today is close to ¢555 colones per one US dollar, some ¢10 colones more since the beginning of this week.

The Cental Bank says it has more than US$7 billion dollars in reserves to curb speculation, which experts beleive would be very harmful to the stability and growth of the Costa Rican economy.

There are two underlying factors influencing the rise in the exchange rate, first, the reduction of the monetary stimulus in the U.S. that is not only affecting Costa Rica but every market, and second, is that the risk caused by the country’s fiscal deficit.

For many the dollar serves as an accumulator value, ie, it is convenient for people and businesses to maintain over time the value of their possessions.

- Advertisement -

Ecomomist Thelmo Vargas, told El Financiero, that individuals and companies seeking to protect their assets could be generating movements (transactions) that the Central Bank calls “atypical” and has led the Central Bank to intervene in the supply of the currency.

So, people who want to protect their wealth in dollars would prevent the sale of the currency, while those in colones would seek the currency in the wholesale markets, like the Monex, explains Vargas.

For Vargas and other economists, the monetary authority with respect to the intervention policies has acted confused and without transparency or without a programmed policy for the non-banking  public sector.

“The Central Bank should not act surprised”, said Vargas.

- Advertisement -

We strive for accuracy in its reports. But if you see something that doesn’t look right, send us an email. The Q reviews and updates its content regularly to ensure it’s accuracy.

"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

Related Articles

The “rebound” effect boosted growth in Costa Rica’s economic activity

QCOSTARICA - Costa Rica's economic activity registered in April 2021 a...

Are the days of the US dollar below ¢600 no more?

QCOSTARICA - The last time we saw the dollar exchange below...


Europe opens the doors to tourism, these are the requirements

Q TRAVEL - Europe opened the doors to tourism. While worldwide vaccination against covid-19 advances above the levels of each country, the restrictions are...

Informants assisted OIJ in corruption investigations, says the minister

QCOSTARICA - The investigation into alleged bribery of public officials in exchange for contracts for road works, received help from informants within the Consejo...

American woman found lifeless in hotel bathroom in Sabana

QCOSTARICA - A sad discovery occurred this Thursday morning in a hotel located in La Sabana, in San José, the lifeless body of a...

Today’s Vehicle Restriction June 19: only “ODDS” can circulate

Today, Saturday, June 19, only vehicles with "ODD" ending plates CAN circulate The measure is countrywide and applied between 5:00 am and 9:00 pm, save...

Heavy downpours generated the first phreatic eruption of this year at the Turrialba volcano

QCOSTARICA - Several residents of La Pastora, La Central and Monte Calas, in the vicinity of the Turrialba volcano, heard a loud rumbling early...

Your cell phone can now notify you if you had contact with a positive case of covid-19

QCOSTARICA - Fifteen months after the national emergency against covid-19 was declared, Costa Ricans will have a digital platform where you can be notified...

“Caso Cochinilla”: Name arose when comparing parasite with hidden corruption

QCOSTARICA - On Monday, the Organismo de Investigacion Judicial (OIJ) moved to the raid, seize and arrest of their investigation into corruption of public...

Lack of space on Racsa’s hard drive paralyzed immigration consultation at the airport this Monday

RICO's DIGEST - We've all had this happen, your computer's hard drive is full and your computer crashes. But we are not the Radiográfica...

Despite investigation, construction of road works by H. Solís will continue

QCOSTARICA - Five major road works under the responsibility of the H. Solís company will continue in development despite investigations for alleged corruption involving...


Get our daily newsletter with the latest posts directly in your mailbox. Click on the subscribe and fill out the form. It's that simple!

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.