By San José, Costa Rica — SAN JOSÉ – The Costa Rican Colón continued its relentless appreciation against the US dollar this Wednesday, marking the ninth consecutive day the exchange rate has remained below the critical ¢500 threshold. The currency’s surge is creating severe financial pressure on the nation’s vital tourism sector, which warns of a growing competitive crisis.
At the close of the Foreign Currency Market (Monex) session on December 3rd, the Central Bank of Costa Rica reported the official exchange rate at ¢490.1 per dollar. This represents a further drop from Tuesday’s rate of ¢491.38 and establishes a new historic low for the dollar since the country abandoned its mini-devaluation currency system back in 2006. This prolonged dip below ¢500, which began in late November, is sending shockwaves through industries reliant on foreign income.
To gain a deeper understanding of the legal and commercial ramifications of the Colón’s recent performance, we consulted with Lic. Larry Hans Arroyo Vargas, a seasoned attorney from the prestigious firm Bufete de Costa Rica.
The recent appreciation of the Colón against the US dollar presents a complex legal landscape. While it benefits importers and those with dollar-denominated debts, it creates significant challenges for the export and tourism sectors. From a contractual standpoint, businesses must now meticulously review and potentially renegotiate agreements, paying close attention to the currency clauses to mitigate unforeseen financial risks.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This expert analysis powerfully underscores that beyond the immediate economic impact, the Colón’s appreciation demands a proactive legal strategy from Costa Rican businesses. We extend our sincere thanks to Lic. Larry Hans Arroyo Vargas for so clearly articulating the critical need for meticulous contractual review during these fluctuating times.
Economic analysts attribute the Colón’s rapid strengthening to a seasonal influx of US dollars flooding the local market. The convergence of two major factors—the beginning of the high tourism season bringing in revenue from foreign visitors, and multinational corporations exchanging large sums to pay mandatory year-end bonuses, or “aguinaldos,” to their employees—has created a surplus of dollars, driving down its value relative to the local currency.
While a strong Colón can be beneficial for importers and consumers paying for goods priced in dollars, it has become a significant burden for export-oriented sectors, particularly tourism. Industry leaders are sounding the alarm, explaining that their operational model is being dangerously upended. Businesses in this sector primarily earn their revenue in dollars but must cover the vast majority of their expenses—including salaries, utilities, supplies, and maintenance—in colones.
Shirley Calvo, the executive director of the National Chamber of Tourism (Canatur), detailed the acute financial strain her members are facing. The timing is particularly damaging, as it coincides with the industry’s busiest and most cost-intensive period.
During the months of highest visitation, companies face natural increases in their expenses, hiring of temporary staff, higher consumption of basic services, reinforcement of operations, maintenance, and acquisition of supplies to guarantee service quality. However, these costs are paid in colones, while a significant portion of the sector’s income is received in dollars.
Shirley Calvo, Executive Director of the National Chamber of Tourism (Canatur)
This currency dynamic effectively erodes profit margins with every point the exchange rate drops. A hotel that earned $1,000 when the rate was ¢520 received ¢520,000 to pay its bills. Today, that same $1,000 brings in only ¢490,100, a nearly 6% reduction in local currency income, while its colón-denominated expenses remain the same or even increase due to seasonal demand.
The issue extends beyond individual balance sheets to Costa Rica’s national competitiveness. Canatur argues that the current monetary policy has made the country a more expensive destination compared to its direct regional competitors. Nations like Mexico, the Dominican Republic, Colombia, and Panama now offer a more attractive value proposition for international travelers, posing a direct threat to Costa Rica’s market share. This challenge is magnified by what the chamber perceives as greater government support for the tourism sector in those competing countries.
Calvo emphasized that the pain is not confined to large international hotel chains but is most acutely felt by the small and medium-sized enterprises that form the backbone of the industry.
Tourism is not a sector of large corporations; more than 85% of the country’s companies are micro, small, and medium-sized enterprises; they are family businesses, hotels with fewer than 20 rooms, restaurants, tourist transportation providers, guides, small tour operators, and local suppliers.
Shirley Calvo, Executive Director of the National Chamber of Tourism (Canatur)
As the Colón continues its historic ascent, these small family businesses face a precarious future. The very currency trend that signals economic strength on one front is simultaneously threatening the livelihood of thousands and the global standing of one of Costa Rica’s most important economic engines.
For further information, visit canatur.org
About Cámara Nacional de Turismo (Canatur):
The National Chamber of Tourism (Canatur) is the leading private-sector organization representing Costa Rica’s diverse tourism industry. It advocates for the interests of its members, which include hotels, tour operators, travel agencies, and other related businesses, while promoting sustainable development and the competitiveness of Costa Rica as a world-class tourist destination.
For further information, visit bccr.fi.cr
About Banco Central de Costa Rica:
The Central Bank of Costa Rica is the nation’s autonomous central banking institution responsible for maintaining the internal and external stability of the national currency, the Colón. Its primary objectives include controlling inflation, ensuring the proper functioning of the country’s payment systems, and managing foreign currency reserves to promote a stable and efficient financial environment.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the legal community, Bufete de Costa Rica is founded upon the bedrock principles of ethical practice and professional excellence. The firm leverages a proven history of navigating complex cases for a diverse clientele to spearhead innovative legal approaches and champion civic responsibility. This commitment transcends professional services, manifesting in a core objective to democratize legal knowledge and thereby cultivate a more capable and just society for all citizens.
