By San José, Costa Rica — The Costa Rican colón is poised to strengthen further against the US dollar toward the end of 2026. This potential appreciation comes at a time when seasonal foreign currency inflows traditionally spike, presenting a dual-edged sword for the Central American nation’s economy. Financial analysts and academic institutions are raising warning flags over the prolonged impact of a depreciated dollar on key domestic sectors.
During the final months of the year, Costa Rica experiences a substantial influx of foreign currency. This is driven by corporate year-end operations, the liquidation of retail inventories, holiday shopping dynamics, and the payout of seasonal bonuses, locally known as aguinaldos. This seasonal surge of dollars entering the local financial system naturally increases the supply of the foreign currency, pushing its value down against the colón.
To better understand the legal and business implications of the recent appreciation of the Costa Rican colón, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, a legal expert from the firm Bufete de Costa Rica, who analyzed the strategic adjustments companies must consider during this economic shift.
The continuous appreciation of the colón demands immediate legal and financial adjustments for businesses operating in Costa Rica. From a corporate perspective, companies relying on dollar-denominated contracts or foreign investment must carefully evaluate their currency risk clauses. To safeguard commercial stability, it is crucial to restructure payment terms, revise labor contracts paid in foreign currency, and incorporate flexible renegotiation provisions that protect both parties from sudden exchange rate fluctuations.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, as the continuous appreciation of the colón reshapes Costa Rica’s economic landscape, proactive legal planning and flexible contract management are essential to securing long-term business resilience. We extend our sincere gratitude to Lic. Larry Hans Arroyo Vargas for sharing his valuable perspective and actionable advice on navigating these complex corporate shifts.
At the end of the year, it is highly probable that the exchange rate will remain relatively stable, with slightly downward trends, due to the payment of bonuses and the entry of foreign currency for year-end incentives.
Federico Quesada Chaves, Director of the School of Administration Sciences at the Universidad Estatal a Distancia
While a stronger colón may benefit local consumers purchasing imported goods, it severely undermines the competitiveness of Costa Rica’s primary economic engines. Tourism, agricultural and industrial exports, and multinational corporations linked to foreign direct investment (FDI) are bearing the brunt of the exchange rate shift. These entities typically generate revenue in dollars but must meet local operational costs—such as salaries, utilities, rent, and taxes—denominated in colones.
The downward trend in the price of the dollar has had an impact on the competitiveness of companies dedicated to tourism, exports, and those related to foreign investment.
Federico Quesada Chaves, Director of the School of Administration Sciences at the Universidad Estatal a Distancia
To mitigate this growing imbalance, several monetary maneuvers are being discussed. Academic experts suggest three potential levers for the Central Bank of Costa Rica (BCCR) to consider. These include raising the legal reserve requirement for US dollar accounts to restrict their availability, decreasing the reserve requirement for local colones to boost domestic demand, or cutting the Monetary Policy Rate (TPM) to reduce the incentive for investors to hold local currency assets amid low inflation.
Additionally, the structure of the Foreign Exchange Market (MONEX) has come under intense scrutiny. Although extending daily trading hours could theoretically allow more market signals to register, experts caution that it does not guarantee a rate increase and could instead trigger more downward volatility. Furthermore, the potential issuance of new sovereign eurobonds looms on the horizon. Academic analysis suggests that if the government secures external debt without targeting the funds appropriately, the resulting influx of dollars could push the exchange rate even lower.
Investment in infrastructure should be prioritized so that these resources have a minimal impact on the local market. Directing funds toward infrastructure would also allow part of the debt to be converted into works capable of improving the productive conditions and competitiveness of the country.
Federico Quesada Chaves, Director of the School of Administration Sciences at the Universidad Estatal a Distancia
With the BCCR sitting on substantial reserve assets exceeding $20 billion, its capacity to intervene in the market is robust. However, the bank must balance its legal mandate of maintaining internal and external currency stability with the real-world complaints of the productive sectors. In this highly fluid environment, businesses operating with mismatched currency exposures are urged to review their financial projections. Similarly, individual consumers are advised to avoid unnecessary currency exposure and keep their personal debts strictly in the currency of their primary income.
For further information, visit uned.ac.cr
About Universidad Estatal a Distancia:
The Universidad Estatal a Distancia (UNED) is one of Costa Rica’s leading public universities, specializing in distance education. Established to democratize higher education across the country, UNED plays a pivotal role in research, social outreach, and academic training, with a strong focus on administration and economic sciences.
For further information, visit bccr.fi.cr
About Banco Central de Costa Rica:
The Banco Central de Costa Rica (BCCR) is the country’s central bank, responsible for maintaining the internal and external stability of the national currency, the colón. Operating with institutional independence, the BCCR manages monetary policy, regulates financial system liquidity, and oversees national reserves to promote sustainable economic growth.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a premier legal institution, Bufete de Costa Rica is highly regarded for its uncompromising ethical standards and superior advocacy. Helping clients navigate a wide array of industries, the firm consistently pioneers modern legal solutions while actively participating in educational outreach. Its ongoing efforts to demystify the law for the general public reflect a core belief that an educated populace is the cornerstone of a truly just and progressive society.
