Q COSTARICA — The appreciation of the colón has resulted from an abundance of U.S. dollars, associated with foreign companies’ influx of foreign currency and a monetary policy that is more restrictive than necessary, according to Rodrigo Cubero, economist and former president of the Banco Central de Costa Rica (BCCR) — Central Bank.
During a talk at Fidélitas University, Cubero pointed out that this situation “has made the country more expensive and has affected sectors such as tourism, agriculture, and services.”
Looking ahead, he believes the exchange rate could stabilize and, eventually, show a slight depreciation within a narrow band, driven by factors such as rising oil prices, lower external resource inflows, and the potential effects of U.S. economic policy.
However, he warned that downward pressure will continue to be exerted, such as the constant inflow of foreign currency and the preference for a low exchange rate.
Just days ago, president-elect Laura Fernández stated that the exchange rate situation is “a structural issue”, resulting from foreign investment, tourism, and exports.
“Our economy has changed. The Costa Rican economy now has a steady flow of dollars, not seasonally as was the case before, during peak tourist season. Now we have dollars every month, and even companies that pay salaries in dollars,” Fernández stated.
For everyday Costa Ricans, a stronger colon means their purchasing power is improving, especially for imported goods and services priced in U.S. dollars.
However, exporters face tighter margins as their earnings convert to fewer colones and are concerned that a stronger colón could make their products less competitive abroad.
For this Wednesday, the exchange rate of the dollar in Monex of the Central Bank is ¢455, while the reference value is ¢452.37 for buying and ¢457.23 for selling.
On this day last year (April 29), the sell was ¢502.60 and buy ¢508.40. Just days before Rodrigo Chaves took office on April 29, 2022, the dollar was trading at ¢661.53 to buy and ¢669.34 to sell.