The dollar exchange rate reached a new minimum in Costa Rica this Wednesday, December 6. The weighted average in the foreign exchange market (Monex) closed at 531.13 colones, the lowest value since February 2014.
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In the counters of public banks, the sale of each dollar is valued at 534 colones at the National Bank, 535 colones at the Bank of Costa Rica (BCR), and 536 colones at the Popular Bank. In other banking institutions, the rate ranges between 537 and 540 colones.
The Central Bank of Costa Rica (BCCR) has reported that an excess of dollars in the country is what is causing this appreciation of the colón. The abundance of the US currency is due, among other factors, to the recovery of the receptive tourism industry, the evolution of exports, and direct investment.
In the latest Monetary Policy Report, the BCCR describes this situation as a « high availability of currencies. »
The first session of the year 2023 in the foreign exchange market (Monex) evaluated the dollar exchange rate at 596.10 colones, representing an appreciation of about 11%.
This Wednesday morning, the business sector in Costa Rica expressed its concerns again about the effects of the colón’s appreciation on business finances and the country’s competitiveness.
On behalf of the sector, the President of the National Chamber of Tourism (Canatur), Rubén Acón, believes that an appropriate exchange rate would be between 540 and 550 colones.
However, the majority of business leaders in the country believe that this value will remain below, between 520 and 540 colones, by the end of the year. This is the result of a survey conducted by the Costa Rican Union of Chambers and Associations of the Private Enterprise Sector (Uccaep) and made public this Wednesday.
The National Chamber of Tourism of Costa Rica (Canatur) and the Chamber of Commerce of Costa Rica stated this Wednesday morning that the appreciation of the colón continues to affect business finances, as they warned almost a year ago.
The appreciation of a currency, also known as « currency appreciation, » occurs when the value of a currency increases relative to another. This means that one unit of the currency in question can buy more units of the compared currency. In other words, a currency is stronger or more valuable compared to the other.
Currency appreciation has significant implications for international trade and investment. A stronger currency can make a country’s products more expensive for export, which can harm the competitiveness of exporting businesses. Conversely, a stronger currency can make imports cheaper, benefiting consumers but affecting businesses that rely on domestic production.
Currency appreciation and depreciation are key elements of international finance and international trade, closely monitored by economists, investors, and governments.
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