Dirty money could enter the market, but not massively to alter the exchange rate

QCOSTARICA — Narcodollars from organized crime could be entering the Costa Rican exchange market, but their participation would not be massive, much less capable of influencing the exchange rate, according to economists consulted by Costa Rica’s leading business newspaper, La Republica.

The unusual growth of US$1.82 billion dollars in the account called “Otros” (“Others”) between 2022 and 2023, whose origin is unknown, must be investigated and not assumed from the outset that it is due to criminal operations trying to launder their money.

These are currency purchase and sale operations carried out annually over the counter and which leave no further record.

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Unusual growth. Between 2022 and 2023, the entry of dollars into the exchange market that did not have a specific origin had unusual growth. This is an increase of US$1.82 billion between one year and the next (figures in millions of dollars according to the Central Bank).

“We have massive income from digital nomads and people who receive income from a lot of places outside of Costa Rica and who do not necessarily register their currencies formally. So, there may be some money laundering behind these accounts, but it seems to me that they will not be significant and therefore, we are creating a storm in a teapot,” said Leiner Vargas, an economist at the Universidad Nacional (UNA).

“The most plausible explanation for this strange growth could be related to tourism and the export sector, which reported record numbers in 2023,” said Fernando Rodríguez, former vice minister of Finance.

“Likewise, it cannot be ruled out that investors are bringing their money to the country to take advantage of the high rates and thus generate returns. These are transitory capitals that push the exchange rate downward,” added Daniel Suchar, economic analyst.

In any case, experts are calling to know the real reason for this growth, since it is impacting the exchange rate used by exporters, tourism and free zones (zonas francas), which is why it is affecting their operations.

**Market pulls the dollar downwards.** As long as the Costa Rican market is flooded with dollars, the exchange rate will remain cheap. In one year, the currency has lost close to ¢50 per unit for purchase. (Central Bank data).

The Central Bank says it already investigating.

“The worrying thing is that the Central Bank is making decisions about the exchange rate, based only on the flows whose origin it knows and is leaving out millions of dollars,” said Gerardo Corrales from Economía Hoy.

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“There are two main reasons why the dollar exchange rate has fallen. The first has to do with the entry of foreign currency from tourism; Likewise, there is an income of dollars from the sale of products and services,” according to Daniela Cordoba Research Institute in Economic Sciences at the Universidad de Costa Rica (UCR).

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