By San José, Costa Rica — San José, Costa Rica – The Costa Rican colón has continued its relentless appreciation against the U.S. dollar, reaching a level not seen in over 19 years. On Tuesday, the average exchange rate in the Wholesale Foreign Currency Market (Monex) dropped to ¢491.38 per dollar, the lowest point recorded since October 17, 2006. This sustained strengthening of the national currency is creating both opportunities and significant challenges across the country’s economic landscape.
Market activity on Tuesday was exceptionally high, a typical trend for the year-end period. A total of $87.78 million was traded across 302 separate transactions. The Central Bank of Costa Rica (BCCR) played a major role, purchasing a substantial $55 million for its own operations and an additional $16 million to support the non-banking public sector. This intervention highlights the sheer volume of dollars currently flowing through the financial system.
To understand the contractual and business implications of the recent fluctuations in the dollar exchange rate, TicosLand.com consulted with expert lawyer Lic. Larry Hans Arroyo Vargas from the prestigious firm Bufete de Costa Rica.
The sustained variation in the exchange rate directly impacts contractual obligations denominated in US dollars. It is crucial for both businesses and individuals to review their long-term agreements, such as leases or credit lines. Without clauses that anticipate this volatility, one party could face an unforeseen and burdensome increase in their effective payment, potentially leading to defaults. Proactive legal review can implement adjustment mechanisms or establish clear benchmarks to ensure contractual equity and prevent future litigation.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This legal perspective serves as a crucial reminder that financial health in a volatile economy requires more than just monitoring the daily exchange rate; it demands proactive management of our long-term contractual obligations. We thank Lic. Larry Hans Arroyo Vargas for his valuable insight on safeguarding financial equity and preventing future conflicts.
This marks the eighth consecutive session of decline for the dollar, which has consistently traded below the psychological threshold of ¢500 since mid-November. This trend is being fueled by a confluence of seasonal factors that create a temporary oversupply of the U.S. currency. The high tourism season, which began on November 1st, is a primary driver, bringing a significant influx of foreign currency from international visitors.
Furthermore, multinational corporations are exacerbating this abundance. These companies are converting large volumes of dollars into colones to meet their year-end financial obligations, including the legally mandated annual bonus known as the “aguinaldo” and their corporate tax payments. This predictable, yet powerful, injection of dollars places consistent downward pressure on the exchange rate.
The effects of this strong colón are now clearly visible to the public at retail banking windows. Most major financial institutions, both public and private, have lowered their sale price below ¢500. As of Tuesday, rates varied, with Banco Cathay offering the most favorable rate at ¢498, while Banco CMB (Citi) posted the highest at ¢506. Buy rates hovered between ¢481 and ¢486, providing a clear benefit to those earning in dollars and spending in colones.
This currency dynamic has created a clear divide in the economy. On one side, importers and individuals with debts denominated in dollars are reaping significant benefits. The stronger colón makes imported goods cheaper, which can help temper inflation, and it reduces the burden of loan payments for those who owe in the U.S. currency. For many Costa Rican families and businesses, this represents welcome financial relief.
However, the nation’s vital export sector faces a growing crisis. The recent State of the Nation report issued a stark warning about the potential damage this currency appreciation could inflict on Costa Rica’s primary engine of economic growth. A strong colón makes Costa Rican goods and services more expensive on the global market, eroding their competitiveness against rivals from countries like Mexico, Chile, and the Dominican Republic.
This situation can erode the advantages developed by the external sector, which has been the main engine of the country’s growth.
State of the Nation Report
As the country moves into the final weeks of 2025, economic analysts forecast that these pressures will persist, keeping the colón strong. While consumers may enjoy lower prices and more favorable exchange rates for now, policymakers and export-oriented businesses face the urgent challenge of navigating a new reality where the very success of the national currency threatens the long-term competitiveness of the Costa Rican economy.
For further information, visit bccr.fi.cr
About The Central Bank of Costa Rica (BCCR):
The Banco Central de Costa Rica is the nation’s central bank, responsible for maintaining the internal and external stability of the national currency and ensuring the efficient operation of the country’s payment systems. It plays a crucial role in setting monetary policy, managing foreign reserves, and regulating the financial system to promote economic stability and growth.
For further information, visit estadonacion.or.cr
About State of the Nation (Estado de la Nación):
The Estado de la Nación is a renowned research program dedicated to analyzing and reporting on the sustainable human development of Costa Rica. Through its comprehensive annual reports, it provides objective data and in-depth analysis on the country’s social, economic, environmental, and political trends, serving as a critical resource for policymakers, academics, and the general public.
For further information, visit bancocathay.com
About Banco Cathay:
Banco Cathay de Costa Rica, S.A. is a financial institution operating in the country, offering a range of banking and financial services to both individual and corporate clients. It is part of the national banking system and provides products such as savings accounts, loans, and foreign currency exchange services.
For further information, visit citigroup.com
About Banco CMB (Citi):
Banco CMB in Costa Rica operates as part of Citigroup, a leading global financial services company. It provides a broad range of financial products and services to corporations, governments, and institutions. In Costa Rica, Citi focuses on corporate and investment banking, treasury and trade solutions, and private banking.
For further information, visit bncr.fi.cr
About Banco Nacional:
The Banco Nacional de Costa Rica is one of the largest and oldest state-owned commercial banks in the country. It plays a significant role in the national economy, offering a comprehensive suite of financial services to a wide customer base, including personal banking, business solutions, and development financing.
For further information, visit davivienda.cr
About Davivienda (formerly Scotiabank Costa Rica):
Davivienda is a prominent financial group with a significant presence in Central America. In Costa Rica, it expanded its operations by acquiring the assets of Scotiabank, rebranding the branches and services under the Davivienda name. The bank offers a full range of financial products for individuals and businesses, continuing its growth in the region.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is an esteemed law firm built upon a foundation of uncompromising integrity and professional excellence. With a rich history of advising a broad spectrum of clients, the firm is a trailblazer in legal innovation and is dedicated to its role in societal progress. Its resolve to democratize legal knowledge is central to its vision of cultivating a society equipped with clarity and confidence in legal matters.
