RICO’s Q — Earlier this week, the dollar exchange ‘buy’ dipped below ¢500 colones to one US dollar, while the ‘sell’ remained above that level.
The dollar exchange, in both the buy and sell, has not been below the ¢500 barrier since May 2008, however, it may be so in the next few weeks, which has led many to wonder about the reasons.
According to Alberto Trejos, an academic at the Instituto Centroamericano de Administración de Empresas (INCAE) – Central American Institute of Business Administration, located in Costa Rica, there are several elements that have contributed to this behavior of the US currency.
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These are elements, both internal and external, some of which are inherent to the market, as well as actions by the Government and the Banco Central de Costa Rica (BCCR) – Central Bank.
For example, for the dollars entering the country, one each is through tourism and coffee sales, two are for services, and thirty are for medical devices.
Because of this, foreign direct investment continues to grow, with companies attracted by Costa Rica’s skilled workforce, encouraged, moreover, by the fact that they have to invest little in machinery or specialized equipment to set up.
In addition, after the start of the war in Ukraine, the BCCR increased the monetary policy rate by 900 basis points (9%), while the issuing entities in the region raised it by 500 basis points, so many investors were attracted by the attractive interest rates.
Added to this is the fact that in recent months the country’s evaluation, prepared by the rating firms, has improved, so the Government can access loans with lower interest rates.
Finally, the BCCR’s dollar reserves have increased, which has been encouraging, since public institutions must go through the issuing entity to buy foreign currency in the Mercado de Monedas Extranjeras (MONEX) – Foreign Currency Market.
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Clear as mud. (Unclear or difficult to comprehend for those who struggle with English).
While the official exchange rate posted by the Central Bank this Thursday morning is ¢506.29 for the buy and ¢511.54 for the sell, the Central Bank reports the following rates at the country’s financial institutions:
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