QCOSTARICA – The head of the Statistics Chair at the Universidad Estatal a Distancia (UNED), Rolando Saborío Jiménez, has taken out his cloud ball predicting the dollar exchange rate remaining in a range of between ¢510 and ¢530 colones per one per dollar by the end of 2024.
The economist explained that the exchange rate is currently one of the most difficult macroeconomic variables to project, since various local and international factors interact and affect its behavior, particularly with the arrival of the end of the year.
Saborío explained that, in the short term, the entry of foreign currency into the country generates downward pressure on the exchange rate, among other aspects such as the payment of the Aguinaldo (year end bonus) and the arrival of tourists to the country. However, the interest rate differential between colones and dollars—with low incentives to invest in colones—exerts upward pressure.
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He also pointed out that the Banco Central de Costa Rica (BCCR) – Central Bank- has intervened on several occasions in order to avoid abrupt fluctuations, to control inflation and provide stability in the country in the face of possible adverse factors.
“We observe that the exchange rate has remained relatively stable in recent months, and it is likely to continue this way for the rest of the year and, possibly, until the first months of 2025,” said the head of the UNED Statistics Chair.
He added that, as we approach the end of the year, this stability is likely to continue, influenced by the Central Bank’s monetary policy and other economic factors, such as foreign direct investment.
In addition, the academic warned that any intervention by the public institution could be key to avoiding unwanted fluctuations that affect inflation and the economy in general.
With this in mind, the academic from the Universidad Estatal a Distancia shared some recommendations for the proper management of the dollar in the current context:
Five key tips:
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- Diversify investments. Maintaining a combination of assets in colones and dollars allows reducing the impact of exchange rate fluctuations on savings. This ensures that the investment portfolio adapts better to movements in the exchange market.
Avoid debts in dollars. For those who receive income in colones, it is advisable to avoid getting into debt in dollars, since an unexpected rise in the exchange rate could increase the amount to be paid. - Take advantage of periods of stability. Given the relative stability of the exchange rate projected for the last two months, purchases or investments in dollars can be planned in an orderly manner, avoiding unnecessary risks and optimizing resources based on long-term needs.
- Maintain an emergency fund. Since the exchange market is sensitive to external factors, having a reserve in colones and dollars can help cover unforeseen events without depending exclusively on a single exchange rate.
- Monitor monetary policy. Interventions by the Central Bank can significantly influence the behavior of the exchange rate. Being aware of the decisions and actions of the BCCR allows financial strategies to be adjusted in time, in response to possible changes in the market.
“Finally, we reiterate the importance of staying informed and proactive in the face of a changing economic environment that facilitates planning and decision-making in an environment of controlled volatility,” concluded Saborío.
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