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HomeNewsCosta RicaImpact of Dollar Exchange Rate on Costa Rica's Economy in 2024

Impact of Dollar Exchange Rate on Costa Rica’s Economy in 2024

The exchange rate is a concern for all Costa Ricans and foreigners residing in or visiting the country. Its impact on the national economy is significant, affecting the entire productive sector. Calculations and projections regarding the dollar exchange rate are also crucial for those who receive their income in foreign currency, as well as for those exposed to foreign exchange risk.

Several experts have analyzed the situation and shared their predictions for the end of the year. Although there are some differences, they generally agree that the average value of the dollar will not reach—or even come close to—the ¢600 mark. As of May 27, 2024, the currency’s value was above or very close to ¢520. A few days later, on June 7, it reached the highest value of the year, ¢535.02.

The Minister of Finance, Nogui Acosta, states that the exchange market has already achieved a certain “stability” compared to the fluctuations seen in 2022 and 2023. However, the productive sector believes it is not financially stable to have an exchange rate equal to that of 2014 while facing the living costs of 2024. The business sector has calculated a stable value of ¢620, which would allow them to operate comfortably and simultaneously prevent the country from losing competitiveness.

Nontheless, experts from the National University (UNA) estimate that the exchange rate will hover between ¢510 and ¢520 for the remainder of the year. Fernando Rodriguez explained that in September and October, there could be an increase in the currency’s value, given that companies order products for their inventories for the end of the year, leading them to the exchange market to purchase dollars. As demand increases, the price could go up.

The Costa Rican Stock Market estimates that the exchange rate will remain between ¢515 and ¢540 by the end of 2024. It also expects increases as the fortnight of each month approaches and greater supply pressures in the fourth quarter. Meanwhile, Acobo Financial Group predicts that if current circumstances continue, the currency’s value could range between ¢525 and ¢545.

“We see conditions in which the exchange rate appreciates and weeks in which it could depreciate. This will happen despite the fact that the market will continue to operate with a foreign exchange surplus,” said Luis Alvarado, an economic and stock market analyst at Acobo.

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