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Costa Rica Central Bank Urged to Cut Rates and Act on Exchange Rate Collapse

Economists called on the Central Bank of Costa Rica to adopt measures that reverse the sharp drop in the dollar exchange rate. The local currency keeps gaining ground, and this movement now hits businesses and households across the country. The dollar trades below 480 colones. It reached ₡474 in bank windows in recent days, the lowest readings in nearly two decades.

Daniel Ortiz of Consejeros Económicos y Financieros and Norberto Zúñiga of Ecoanálisis reviewed the trend and said the Central Bank must act to limit damage to the economy, companies and families. Zúñiga said the current exchange rate level holds no economic logic. It proves ruinous for many sectors, even the government’s own finances. He pointed to effects on tax collection, fiscal balances, debt figures, the financial system and pensions.

Ortiz said the recent movements create direct effects on companies and raise uncertainty in their planning. Rapid appreciation adds pressure on export and tourism sectors. It affects national competitiveness and government revenue collection. From December 2025 the colón appreciated nearly 4 percent against the dollar. This adds to more than 20 percent appreciation over recent years.

A surplus of dollars pushes the colón stronger. Record earnings from service and goods exports, strong tourism numbers, steady foreign direct investment and the current monetary policy settings all play a role. The Central Bank holds reserves near 18 billion dollars. It intervenes with dollar purchases in the Monex market to slow the decline.

Ortiz said the Central Bank could consider further reductions in the policy rate, now at 3.25 percent. Such a step would raise demand for dollars and reduce the relative appeal of colón investments. He added that if the dollar abundance stems from deeper factors like service income and investment flows, officials need to review a wider set of tools. Recent interventions already send a positive signal.

Zúñiga proposed specific actions to cut dollar supply and lift demand. The government should prepay external credits instead of issuing new loans, such as the recent euro placements of 1,000 million euros each in November and January. Officials should also lower the policy rate quickly and in meaningful size, given negative inflation and expectations for the year. A reduction in legal reserve requirements on colones would help as well.

He said in other times all sectors would open a national dialogue to adopt needed measures. That has not happened, and the consequences stay unpredictable. Tourism operators reported 22,000 jobs already lost. They warn of more business closures without stability. They seek a steady range between 550 and 590 colones per dollar to keep operations running.

President-elect Laura Fernández said dollar inflows now flow steadily year-round rather than in seasonal peaks from tourism. She described this as a structural shift in the Costa Rican economy. The exchange rate falls under the Central Bank’s technical responsibility. The dollar fell from 696 colones in mid-2022. The stronger colón lowers costs for imported goods and fuel, which helps consumers and importers. At the same time it tests the export-driven model that has shaped growth for more than four decades.

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