Costa Rica’s colón continues to defy gravity against the U.S. dollar, closing yet another week below the ¢460 mark and tightening the squeeze on tourism operators, exporters and dollar-earning expats that The Tico Times has been tracking for months. The story took a fresh turn over the weekend, when newly published minutes from the Banco Central de Costa Rica (BCCR) revealed an open split inside the bank’s own boardroom over what to do next.
According to El Financiero, the BCCR’s reference rate on Saturday stood at ¢457.22 to sell and ¢451.57 to buy, and the wholesale Monex market closed the week below ¢460 for the umpteenth time this year. That extends a run that began when the Monex weighted average broke below ¢470 in mid-March and has drifted lower ever since. For perspective, the Monex average sat at ¢497.07 on January 2 of this year — meaning the colón has gained more than 7% on the dollar in less than four months, on top of the roughly 27% it had already appreciated since mid-2022.
Two Directors Want a Rate Cut
The most consequential development this weekend came not from the Monex floor but from the BCCR’s own meeting room. Two members of the Junta Directiva — Jorge Guardia and Juan Robalino — broke with the majority at the end of March and voted to cut the Tasa de Política Monetaria (TPM), the bank’s benchmark interest rate. The other four directors voted to hold the rate at 3.25%, where it has sat since the end of 2025.
Guardia argued that headline inflation has been hovering between zero and negative territory — well below the BCCR’s 2% to 4% tolerance band around its 3% target — and that the bank had room to cut by 25 basis points. He says the BCCR should be doing “monetary policy and not price policy,” a pointed line that captures the dissenters’ core complaint: that the bank is using its policy rate to fight imported price shocks (oil, Middle East tensions) rather than the domestic monetary conditions it actually controls.
Robalino, for his part, argued that even in the worst-case external scenario, inflation would only return to roughly 3% and stay below 4%, leaving plenty of headroom for a cut. BCCR president Róger Madrigal called the dissenting position “very respectable” but defended the hold, telling reporters that monetary policy has to be set on a forward-looking basis rather than as a reaction to past negative inflation prints. The next rate-setting meeting is scheduled for May 21.
Policy Rate Effects
The dissenters’ argument matters well beyond the BCCR boardroom because the policy rate is one of the few levers that could, in theory, take some pressure off the colón. As The Tico Times has reported throughout 2025 and 2026 — from the colón’s drop below ¢500 in November, to the 17-year low set in February, to the deepening structural problems documented earlier this month — a high real interest rate combined with a flood of incoming dollars from tourism, exports and foreign direct investment has kept the local currency on an almost unbroken upward path. Lower rates, in classical economic terms, would make colón assets less attractive and ease at least some of that appreciation pressure.
For visitors, the practical effect of the strong colón is simple and unwelcome: dollars don’t go as far as they used to. Hotels, tours and restaurant meals priced in colones are effectively more expensive in dollar terms than they were in 2022, and even dollar-denominated tourism prices have crept up as operators try to defend margins they earn in colones. The National Chamber of Tourism (CANATUR) has spent the better part of a year warning that Costa Rica is pricing itself out against rivals like Mexico, El Salvador, Panama, the Dominican Republic and Colombia, and recent ICT data showing softer air arrivals tracks with that concern.
For expats living on dollar income — pensions, Social Security, remote work salaries — the math is equally grim. A monthly check that converted into roughly ¢640,000 at mid-2022 rates now converts into closer to ¢460,000, a real-terms haircut of nearly 28% in local purchasing power without anyone moving a single line on a budget spreadsheet. Real estate listings priced in dollars look cheaper on paper, but rental and living costs in colones keep climbing in dollar equivalents.
For exporters and tourism operators, the squeeze is the mirror image: revenue arrives in dollars, payroll and operating costs go out in colones, and the gap between the two narrows every week the colón holds below ¢460. The Cámara de Exportadores has formally asked the BCCR to lower its policy rate to ease the burden, the same demand now coming from inside the bank’s own board.
What changes next depends largely on the May 21 meeting. If Guardia and Robalino can pull two more directors with them, a rate cut becomes possible — and with it, at least the chance of a pause in the colón’s slide. If the 4-2 majority holds, the betting line among private-sector economists is that the rate could test fresh lows below ¢450 before the year is out. Either way, the dollar-denominated visitor and the dollar-paid resident are likely to keep feeling the weight of a colón that, for now, simply refuses to weaken.
