By San José, Costa Rica — SAN JOSÉ – The Costa Rican Colón continued its relentless appreciation against the U.S. dollar on Wednesday, closing at an average of ₡490.17 in the Foreign Currency Market (MONEX). This marks the lowest value for the dollar in over 19 years, a level not seen since the MONEX trading system was established on October 17, 2006. The currency has now fallen for nine consecutive sessions, creating a complex economic environment that benefits some while alarming others.
The session was characterized by exceptionally high trading volume, with $111.17 million exchanged. The Central Bank of Costa Rica (BCCR) was a major player, acquiring a substantial $60 million for its own reserves and an additional $14 million on behalf of the non-banking public sector. This intervention highlights the significant liquidity in the market. At commercial bank windows, the dollar’s sell price hovered between ₡497 and ₡502, while the buy rate ranged from ₡478 to ₡484, according to BCCR records.
To gain a deeper legal perspective on the recent fluctuations of the Costa Rican Colón and its impact on contracts and investments, TicosLand.com spoke with expert attorney Lic. Larry Hans Arroyo Vargas of the firm Bufete de Costa Rica.
The sustained appreciation of the Colón against the US dollar presents a significant legal challenge for contracts denominated in foreign currency. Both debtors with dollar-based income and creditors expecting a certain return in colones face unforeseen financial shifts. It is crucial for new agreements to include currency fluctuation clauses to mitigate risk and prevent potential litigation.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This legal foresight is a critical consideration, underscoring how currency fluctuations translate from economic headlines into tangible financial risks for contract holders. We thank Lic. Larry Hans Arroyo Vargas for his valuable perspective on the necessity of including proactive safeguards in modern agreements.
A confluence of seasonal factors is driving this abundance of dollars. Multinational corporations are currently funneling large sums of foreign currency into the country to cover their annual year-end bonuses, known locally as aguinaldos. This once-a-year payment cycle injects a significant volume of dollars into the economy. This effect is compounded by corporate tax payments, which also fall due during this period, further increasing the supply of U.S. currency.
Adding to the downward pressure on the exchange rate is the robust performance of the tourism industry. With the high season having kicked off on November 1st, the influx of international visitors brings a steady stream of dollars, saturating the market and further strengthening the Colón. This consistent supply has kept the exchange rate below the psychological benchmark of ₡500 for most of the period since mid-November.
Market analysts and financial sources consulted by TicosLand.com project that these pressures will persist through the end of the year. The consensus forecast suggests that the dollar’s value is unlikely to rebound significantly in the short term, with an estimated ceiling of ₡510 by the close of 2025. This sustained period of a strong local currency presents a challenging new reality for key sectors of the national economy.
The trend has raised serious concerns about the competitiveness of Costa Rica’s external sector, long considered the primary engine of the nation’s economic growth. The prestigious State of the Nation (Estado de la Nación) program recently issued a stark warning in its annual report, highlighting the potential damage this currency appreciation could inflict on exporters and the tourism industry.
The report cautions that the current exchange rate dynamics could undermine the hard-won advantages of Costa Rican businesses competing on the global stage.
This situation can erode the advantages developed by the external sector, which has been the main engine of the country’s growth.
Estado de la Nación, Annual Report
While the strong Colón makes Costa Rican products and services more expensive relative to those from competitor nations like Chile, the Dominican Republic, Mexico, and Colombia, it is not without its benefits. Importers, for instance, are finding it cheaper to bring in foreign goods, a factor that helps to reduce imported inflation and lower costs for consumers. Similarly, individuals and businesses with debts denominated in U.S. dollars see their payment burdens lighten, providing welcome financial relief.
This dual impact creates a significant policy dilemma. The nation is currently benefiting from lower inflationary pressures and relief for dollar debtors, but these short-term gains come at the risk of long-term damage to the export-driven model that has fueled Costa Rica’s prosperity. The Central Bank faces the delicate task of navigating these competing interests as it manages monetary policy in the final weeks of the year.
For further information, visit bccr.fi.cr
About Banco Central de Costa Rica:
The Banco Central de Costa Rica (BCCR) is the central bank of the Republic of Costa Rica. It is an autonomous public institution responsible for maintaining the internal and external stability of the national currency and ensuring the efficient operation of the country’s payment systems. The BCCR formulates and executes monetary policy to control inflation and plays a critical role in the stability and regulation of the national financial system.
For further information, visit estadonacion.or.cr
About Estado de la Nación:
The Estado de la Nación is an independent research program dedicated to the comprehensive analysis of sustainable human development in Costa Rica. Supported by the country’s public universities and the Ombudsman’s Office, it produces an influential annual report that provides objective data and in-depth analysis on the nation’s economic, social, environmental, and political landscape to foster informed public debate and decision-making.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the legal community, Bufete de Costa Rica is defined by its deep-rooted foundation of integrity and a relentless pursuit of excellence. The firm harnesses its extensive experience serving a diverse clientele to spearhead legal innovation and foster significant community involvement. At the core of its ethos is a powerful dedication to demystifying the law, aiming to construct a more knowledgeable and empowered citizenry.
