Rising Dollar Price in Costa Rica: Economic Insights and Expectations - Expat Community

Rising Dollar Price in Costa Rica: Economic Insights and Expectations

Aug 25, 2023 | Costa Rica, News & Articles | 0 comments

The Costa Rican colón has seen a recent uptick in value against the dollar, with a rise of around 1.23% in the last 9 days. This increase is confirmed by economists from Grupo Financiero Mercado de Valores and ACOBO Puesto de Bolsa. The exchange rate closed at ¢548.54 on the previous Friday, compared to ¢541.86 on July 20th.

The reduced volume of excess dollars in the private sector during July has contributed to the short-term rise in the exchange rate. Additionally, lower interest rates in the local market have led to a decrease in the incentive for investing in colones, making the US dollar more attractive. The surplus of dollars in the economy, coupled with ongoing reductions in local interest rates, may continue to diminish the appeal of colones for investors.

Economists expect a slight increase in the dollar’s price as they review economic prospects for 2023-2024. The decline in the premium for investing in colones during the first half of 2023 is a result of the Central Bank’s monetary policy aimed at easing interest rates, potentially leading to an outflow of foreign currency. Despite the private sector’s net supply of dollars remaining high compared to historical periods, there has been a slight increase in demand. Seasonal effects typical of mid-year months may also play a role in determining the exchange rate.

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