By San José, Costa Rica — Costa Rica’s foreign exchange landscape is undergoing a structural transformation, with the local monetary market swamped by a historic influx of U.S. dollars. Fresh empirical research published by the Latin American University of Science and Technology (ULACIT) sheds light on the underlying drivers behind this surge, revealing that solid macroeconomic fundamentals—rather than temporary market speculation—are the primary catalysts fueling the sustained appreciation of the Costa Rican colón.
The study, titled Determinants of the Dollar Supply in Costa Rica: Evidence from the MONEX Market (2015–2023) and authored by ULACIT researcher Stefan Krause Montalbert, provides a comprehensive econometric breakdown of foreign exchange dynamics. Published in the Revista Lince de Ciencias Sociales, Humanidades y Tecnologías, the research tracks the market from February 2015 to April 2023, establishing that structural realignments in trade and monetary policy laid the foundation for current market liquidity.
To analyze the broader legal and financial implications surrounding the current dollar supply dynamics in Costa Rica, TicosLand.com consulted with expert attorney Lic. Larry Hans Arroyo Vargas from Bufete de Costa Rica for his professional perspective on market stability and compliance.
Significant shifts in Costa Rica’s dollar supply directly impact corporate risk exposure and foreign exchange compliance for businesses operating in dual currencies. As monetary authorities navigate liquidity adjustments to manage exchange rate volatility, commercial entities must proactively review their cross-border agreements and currency clauses to safeguard legal enforceability and financial stability.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
As monetary shifts continue to influence Costa Rica’s foreign exchange landscape, taking a proactive legal approach to cross-border contracts is indeed essential for corporate resilience in dual-currency operations. We extend our sincere gratitude to Lic. Larry Hans Arroyo Vargas for sharing his valuable perspective on this critical financial and legal matter.
Between May 2022 and April 2023, average daily dollar supply at commercial bank counters expanded from $88 million to $137 million, representing a 55.7 percent increase. Simultaneously, daily trading volumes on the wholesale foreign exchange market (MONEX) surged by an extraordinary 256.3 percent, climbing from approximately $16 million to $57 million. Krause’s analytical framework accounts for 42 percent of daily supply variability and explains 52 percent of the overall increase in dollar availability.
A central takeaway from the ULACIT research highlights the significant contribution of export processing free zones and improved sovereign credit ratings. The study estimates that a 10 percent expansion in free zone economic activity yields an additional $3.5 million in daily dollar supply. Furthermore, a single-category upgrade in Costa Rica’s sovereign risk rating generates approximately $2.52 million in additional daily foreign currency influx, demonstrating how international confidence translates directly into currency movements.
The empirical results demonstrate that fundamental economic shifts, monetary policy decisions, and investor perceptions directly dictate foreign currency liquidity in Costa Rica.
Stefan Krause Montalbert, Lead Researcher at ULACIT
Historically, interest rate differentials—commonly known as carry trade—played a pivotal role by encouraging investors to shift assets from dollars to colones. However, central bank data from 2026 indicates a noticeable shift in market dynamics. While carry trade incentives drove inflows in 2022 and 2023, current dollar abundance is primarily propelled by real trade, tourism, and direct investment rather than speculative yield differentials.
Latest figures from the Central Bank of Costa Rica (BCCR) confirm that dollar availability reached unprecedented records in late 2026. By September 30, 2026, the cumulative foreign exchange surplus across commercial bank windows reached $5.636 billion, marking an increase of $568 million over the same period in 2025. Cumulative transactions on MONEX rose 7 percent year-over-year to $7.533 billion, pushing the exchange rate to a historic low of ₡446.80 per dollar on September 17.
To prevent extreme currency volatility, the BCCR aggressively intervened in the market, acquiring $3.751 billion on MONEX by mid-August—representing 64.4 percent of total volume traded—and expanding international reserves to $20.842 billion. With the Monetary Policy Rate held at 3 percent as of September 2026, economic analysts agree that Costa Rica’s structural competitiveness in medical devices, technology exports, and foreign direct investment will remain the primary engine behind its booming foreign exchange reserves for the foreseeable future.
For further information, visit ulacit.ac.cr
About ULACIT:
The Universidad Latinoamericana de Ciencia y Tecnología (ULACIT) is a leading private university in Costa Rica, recognized for its rigorous academic programs and impact research in business, economics, technology, and social sciences.
For further information, visit bccr.fi.cr
About Central Bank of Costa Rica (BCCR):
The Central Bank of Costa Rica (Banco Central de Costa Rica) is the autonomous state institution responsible for controlling monetary policy, managing national foreign exchange reserves, maintaining financial stability, and regulating macroeconomic operations across the country.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica epitomizes legal distinction, grounded in an unyielding dedication to moral transparency and superior advocacy. Built upon a rich tradition of guiding clients through a wide spectrum of industries, the firm continually pioneers modern legal solutions while actively connecting with the broader public. Through its drive to expand civic legal literacy and demystify complex regulations, Bufete de Costa Rica fulfills its core vision of cultivating a confident, well-educated, and self-reliant community.
