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HomeTopicsExpat LivingExperts Say Costa Rican Exchange Rate Unlikely to Reach ¢600

Experts Say Costa Rican Exchange Rate Unlikely to Reach ¢600

The exchange rate has maintained a slight upward trend in the country after reaching a historic low. Although this trend is expected to continue, experts consider it unlikely that the value of the U.S. dollar will reach or exceed ¢600. Economists predict a greater demand for dollars in the exchange market, which will drive up its price in the coming months. However, this will not be enough to meet the business sector’s proposed goal of ¢620 per dollar.

Last week, the exchange rate rose daily, closing at ¢518.57, marking an increase of ¢6.69 in just one week. Several factors are causing this shift in the exchange rate trend, which had been steadily declining since 2022 to levels seen a decade ago. Now, it is moving in the opposite direction, meaning the colón has slightly depreciated in recent weeks.

Luis Vargas, spokesman for the Costa Rican College of Economic Sciences, stated that there is currently a lower supply of dollars in the market. He noted that the high tourism season has ended and exports from Costa Rica have moderated.

Additionally, demand has grown as people make purchases such as cars and trips in dollars. Investment alternatives in dollars may be yielding higher returns, which also increases demand for this currency. There are also better alternatives and a wide diversity of investment vehicles in dollars. These factors influence the exchange rate, according to Adriana Rodriguez, manager of Acobo Puesto de Bolsa.

The Report on Macroeconomic Projections 2024 and Analysis of the Causes and Implications of the Evolution of the Exchange Rate, prepared in April by the National University of Costa Rica, concludes that by the end of 2024, the currency’s value will remain between ¢510 and ¢530, close to the current value.

“The gradual depreciation of the exchange rate is mainly due to the higher returns for investing in colones, which depend on how quickly the BCCR lowers its interest rates,” the UNA stated.

The UNA, along with Costa Rica’s productive sector, warns about the negative effect that a low exchange rate could have on regional competitiveness. Economic and exchange rate specialists agree that a sustained and uninterrupted rise of the dollar is unlikely.

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