QCOSTARICA — Due to the payment of aguinaldos (year-end bonuses), marchamos, taxes, and the high tourist season, foreign investment and exports, the dollar exchange rate could close the year touching the barrier of ¢500 colones per US dollar.
For the last two months of the year, the exchange market is seasonally flooded with dollars; however, for this year there is an additional reason.
And it is that neither the central government nor other public institutions are making large purchases of dollars, while the price of crude oil at the international level remains stable.
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Although there is a possibility that the currency will exceed the threshold of ¢500, financial experts agree that this is unlikely.
This Monday, November 4 in the morning, the reference rate provided by the Central Bank set the sale at ¢516 and the purchase at ¢508.
“Our market is a non-competitive one, dominated by seasonal factors that impact the operating flows of companies, in terms of the supply of foreign currency. The last quarter of the year brings sales of foreign currency for the payment of bonuses, marches and other significant obligations that are made in national currency, while the bulk of the country’s economic activity records income and sales in dollars. In theory it could do so; in practice it is more likely that the exchange rate for buying the dollar will be below the important level of ¢500,” said Adriana Rodríguez, General Manager of ACOBO Puesto de Bolsa.
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By the end of the year, large companies based in other countries bring millions of dollars to pay taxes to the State, as well as money to pay the aguinaldos of their workers. That would be the case of companies that are under the free zone regime.
Predicting the movement of the US currency is not easy, according to the experts consulted. However, it is clear that there are seasonal factors that tend to reduce its value. On the other hand, there are no visible pressures on the horizon that will push the currency upwards.
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In this sense, most experts agree that the U.S. Dollar could close 2024 between ¢510 and ¢530 while others point out that it could approach the ¢500 barrier.
“Dollar debtors and importers will be happy, but other sectors will be worried, because it affects the country’s competitiveness, foreign investment, tourism and exports,” said Gerardo Corrales, economist at Economía Hoy.
Paying advance installments on loans in dollars, investing in that currency and traveling at this time are some tips that would allow you to take advantage of the cheap exchange rate of the dollar.
Saving in that currency and buying inventory in advance, in the case of Pequeñas y Medianas Empresas (PYME) – amall and midsize enterprises, are other measures that could help mitigate the impact of the appreciation of the colon.
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Another tip would be to invest in financial instruments in dollars such as term deposit certificates. Always carry out a risk-return analysis.
Other expert voices:
“The exchange rate has been steady in recent months and is expected to remain stable for the rest of the year and possibly into early 2025. This consistency allows for planned purchases or investments in dollars to be made without unnecessary risks, optimizing resources for future needs. It is important to stay informed and proactive in the ever-changing economic environment to facilitate strategic planning and decision-making in a controlled volatile market,” said Rolando Saborío, Head of the Statistics Department of the Universidad Estatal a Distancia (UNED).
“We predict that the dollar will likely end the year between ¢510 and ¢530. This lower range is influenced by factors such as the reactivation of tourism during the high season, the payment of Christmas bonuses in December, and the strong exports bringing in dollars. It is unlikely that the dollar will drop below ¢500, as the exchange market has been stable. While there may be fluctuations, it is not expected to exceed this threshold. It is advisable to closely monitor developments in the coming days,” explained Daniel Suchar, economist.
“Due to the lack of increased demand for dollars and the increased supply, there is likely to be a surplus in the coming months, particularly during tax payment periods. Additionally, factors such as high tourist seasons and the growth of free trade zones are expected to further boost the supply of dollars in the local market, potentially causing a decrease in the exchange rate towards the end of the year,” said Grettel Vásquez, Economic Studies Analyst at Scotiabank.
Recommendations from the experts
These are 10 recommendations that experts give to take advantage of a cheap exchange rate. The expectation is that the dollar will not have major movements at the end of this year and during 2025.
- Savings. If you have savings, you could buy dollars with the expectation of obtaining a good profit when the dollar rises in price
- Investment. Invest in financial instruments in dollars such as term deposit certificates. Of course, always doing a risk-return analysis
- Payment of debt in dollars. If you have loans in dollars and income in colones, it is a good time to advance installments and take advantage of a cheap exchange rate
- Travel. With a cheap exchange rate, it is a good time to travel, since not only will the tickets be cheaper when converting to colones, but also the services you pay abroad
- Short-term purchases. If you make purchases of goods and services with credit cards, you must make sure that you have a short-term payment; In addition, you should make sure you have the budget in colones to buy dollars in the future, since the exchange rate will not remain cheap forever
- Christmas is here. Consumer items that you have wanted to buy abroad can be bought now and thus take advantage of the cheap exchange rate.
- Opportunity for entrepreneurs. People with a business, large or small, can take advantage of the exchange rate to buy machinery or supplies at an advantageous price, so that they save money and manage inventory in the face of greater demand
- New car. Families could consider investing in imported durable goods, such as personal vehicles
- Advance payments. It is worth buying dollars at this time and reserving them for recurring payments in that currency
- Prudence. The volatility of the exchange market must be considered.
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