Costa Rica: More Inflation and Less Devaluation

The Costa Rican Colon is expected to depreciate less over the next twelve months, compared to what was expected a year ago, according to a survey made by the Central Bank of Costa Rica.

Friday, February 11, 2011

A year ago, in January 2010, the expectation was a devaluation of 5.5%, with an exchange rate of ¢ 563 at the time. That would have meant that one dollar would now be worth ¢ 593.

Currently, expectations consider 3.8% devaluation according to the survey, so the rate by January 2012 should be ¢ 525.

During the week the non-banking public sector has tripled its foreign exchange transactions in the wholesale market (Monex), however, the biggest purchases have generated only a slight increase of ¢ 1.4 on the weighted average of Monex, ¢ 504.44, where the average exchange rate has remained relatively stable so far this year.

The same survey reveals an expected increase in inflation to 6.8%, which should be accompanied by devaluation in order to keep the relative price of domestic and international goods constant, assuming inflation is less than 3% for the rest of the world.

More on this topic

Costa Rica: Intervention to Stabilize Exchange Rate

March 2017

In one day the Central Bank sold $30 million on the wholesale foreign exchange market in order to moderate the upward trend that had been seen in the price of the dollar against the Colon.

The transaction was made in order to prevent sharp fluctuations in the exchange rate, which since the beginning of the year has shown an upward trend in the wholesale Monex market. On Thursday, March 23, alone the Central bank sold $30.9 million, the highest figure of the year.  

Costa Rica: Slow Depreciation of Colon Continues

September 2016

The exchange rate in the wholesale Monex market has gone from ₡535.9 per dollar in mid-March to ₡553.9 in the first week of September this year.

Despite interventions by the Central Bank, the exchange rate in Costa Rica has maintained a clear upward trend for several months, reflecting in a devaluation of 3% so far this year.

Costa Rica: Dollar Price Falls 3% in a Month

July 2014

In the last 30 days the price of the dollar against the Colon went from 557 colones to 540.4 colones in the Monex wholesale market.

The decision to remove the non-fiinancial public entities from the wholesale market and less demand for foreign currency in recent weeks are the reasons for the drop of 17 colones in the price of the dollar.

Costa Rica: Central Bank Intervenes in Exchange Market

May 2014

Over three consecutive days the central bank injected $39.4 million into the wholesale foreign exchange market in order to control the rise of the dollar against the local currency.

The U.S. dollar was quoted on Thursday May 29 at 559 colones in the Monex wholesale market, which is above the average value of 555.6 colones per dollar recorded on Wednesday 28 May.

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