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HomeNewsCosta Rica Forecasts Steady Exchange Rates After 2023 Shift

Costa Rica Forecasts Steady Exchange Rates After 2023 Shift

Following a year of substantial colón appreciation against the US dollar in 2023, analysts project exchange rate stability in the year ahead with the possibility of moderate weakening. After closing last week at ₡522.39 per dollar on the Foreign Exchange Market (Monex) – an 11% gain since last December – the steep currency climb could level out moving into 2024.

“Relative stability is being discussed because a range could be established between ₡550 to ₡535,” stated Pablo González, an economic analyst from the Costa Rican Stock Exchange. This contrasts 2023’s pronounced shifts, including the colón strengthening 12.36% since January and 1.82% over just the last month.

The steadying owes to robust ongoing influxes of foreign capital. With tourism and export revenues still performing well, experts see no drop forthcoming in dollars entering Costa Rica. “We do not anticipate a decrease in foreign currency inflows either. Overall, it could be expected that pressures leading to the appreciation of the colón will persist,” Luis Vargas, an economist from the College of Economic Sciences, explained.

Yet as 2024 progresses, typical gradual colón depreciation against the greenback should resume. So while the exchange rate holds initially, it will likely slide downward to more expected levels throughout the year.

After benefiting from the substantial 2023 swing, importers and debtors tied to dollars stand to lose should depreciation return. Meanwhile, dollar-earning tourism enterprises and exporters hoping to maintain profitability will welcome steadier rates.

The recent dramatic shift, which saw the colón hit parity with 2012, left ripple effects across Costa Rican finance. But analysts emphasize foreseeing future moves allows companies to plan accordingly regarding pricing, supply chains and navigating obligations. With projections set and a bias to stability, firms can approach 2024 strategically.

Though susceptible to global forces, experts contend Costa Rica’s currency should avoid 2023’s pronounced volatility. While the dollars may gradually regain strength, analyses suggest the colón’s climb should stabilize rather than reverse course dramatically. So despite some downward drift anticipated, financial markets look far calmer ahead.

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