Friday 31 March 2023

Tourism, exporters and service companies will hire fewer staff with the dollar falling

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Dollar Exchange

¢540.39 Buy

¢545.95 Sell

31 March 2023 - At The Banks - BCCR

Paying the bills


QCOSTARICA – Tourism, exporters of agricultural goods and service companies will hire fewer staff with a falling dollar exchange rate, according to experts consulted by the business newspaper, La Republica.

The experts warn that not only would there be fewer job opportunities if the situation continues, but there would be thousands of layoffs if there is no change of direction of the dollar exchange.

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This is bad news for more than 286,000 people, who today do not have a source of employment, and whose prospects of finding a job would be less.

So far this year, the price of the dollar exchange has dropped ¢45, according to the records of the Mercado de Monedas Extranjeras (Monex) – Foreign Currency market, as the US dollar fell below ¢550 on Tuesday.

“The exchange rate impacts many sectors that lose money every day and for this reason, they are not going to hire anyone because it would be additional expenses that they cannot afford,” said Daniel Suchar, a financial analyst, told La Republica.

Currently, 65% of the unemployed are under 35 years of age, while 75% have a college level or less, job profiles suitable for the tourism, agricultural, and service sectors that are the hardest hit by this drop in the dollar exchange.

This led businessmen in the tourism and export sectors to request the Central Bank to intervene.

Yesterday, tourism representatives once again made a rescue call.

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“The tourism chambers of different regions of the country assure that the fall of the dollar generated a 20% reduction in their income in colones and this will make it impossible for them to generate new jobs, as well as the postponement of new renovation, remodeling and expansion projects. facilities. The fall of the dollar occurs just months after the resounding decline in tourism, hit by Covid-19,” the Guanacaste National Chamber of Tourism said in a statement.

Exporters, for their part, allege that they have suffered a constant impact in recent months due to the drop in the exchange rate, a situation that could lead to the closure of some companies; given, the loss of competitiveness in foreign markets, the reduction of profit margins and therefore, the difficulty to meet obligations in local currency.

“The appreciation of the colon against the dollar is temporary and is definitely not sustainable, so it is to be expected that expectations about the exchange rate will begin to grow in the coming months and the players will begin to place their monetary positions accordingly to these new expectations.

“The impact generated by the uncertainty in the investment markets will depend on the Government making an important announcement regarding its economic reactivation policy, which up to now has not been sufficient or has sent the correct signals,” highlighted Mónica Segnini, president of the Council for the Promotion of Competitiveness.

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José Tomas Batalla, representative Guanacaste Chamber of Tourism, said “We ask the Central Bank to return to an exchange rate that allows us to cover expenses and make investments.”

Elizabeth Morales, assistant manager at Coopecaja, says “The exchange rate positively affects the cost of the raw material that is the basis of national production, but negatively impacts the exporter because it does not recover production costs, since when converting the currency it receives fewer colones and this affects your income.”

According to Universidad Nacional economist, Greivin Salazar, the most benefited sectors are the importer and retailers that acquires goods and services from abroad at lower prices in terms of colones. “The issue is whether this effect will be transferred to the consumer and how long it could take for this to happen. However, the most affected are the export sector since a stronger colón makes the price of exports in dollars higher.”

For its part, on Tuesday, January 31, the Banco Central de Costa Rica (BCCR) – Central Bank – intervened with the purchase of US$25.5 million dollars, of which it sold US$11.5 million to the non-banking public sector, propping up the dollar exchange one colon today, Wednesday.


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Paying the bills
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"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.

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