The doubts generated by the fiscal proposal with which the Costa Rican government plans to discuss a loan with the IMF, would be the main cause of the recent upward trend in the dollar's price, which as of September 29 was quoted at ₡604,52.
The figures of the Central Bank of Costa Rica (BCCR) report an upward trend in recent days, since between September 11 and 29 the price has risen from ₡595,41 to ₡604,33, which is equivalent to a 2% variation.
In the last 15 days, the price per dollar in the wholesale market has risen ₡16, which can be explained by economic uncertainty and people's preference for buying dollars.
According to data from the Central Bank of Costa Rica (BCCR), a rising trend has been reported in recent weeks. Between March 11 and 26, the price has risen from ₡565.69 to ₡581.77, equivalent to a 3% variation.
Between March 23 and 24 the price of the Quetzal vs. Dollar rose from Q7.67 to Q7.75, which is attributed to the expectations of a possible economic slowdown, due to the impact of the Covid-19 crisis.
The expectations of a decrease in the income of family remittances, the time that the international economy could be depressed and the component of fear in the agents, are other causes of the upward pressure that the exchange rate has reported in the last hours.
During 2019, the price of the dollar in Costa Rica registered multiple fluctuations; however, for this 2020, such abrupt variations are not anticipated, since the Central Bank starts the year with reserves close to $9 billion.
Data from the Central Bank of Costa Rica (BCCR) show that between February 4 and November 28, 2019, the average dollar price in the Costa Rican market fluctuated considerably, ranging from ₡614.31 to ₡562.63.
With the aim of cushioning the fall in the price of the dollar, which between November 5 and 25 was reduced in ₡18,35, in just two days the Central Bank intervened buying more than $30 million.
Of the $41.5 million negotiated at Monex during the November 22 session, the Central Bank of Costa Rica (BCCR) purchased $36 million, and of the $30.7 million negotiated on November 25, the monetary authority acquired $27 million.
After the exchange rate closed on August 23 at ₡565,88 per dollar in the wholesale market MONEX, an upward trend has been reported since then, reaching ₡581,33 per dollar on September 5, which could be the result of a lower participation of the Central Bank in the exchange market.
Official figures from the Central Bank of Costa Rica (BCCR) report that between early February and mid-August of this year, there has been a fall of up to 48 colones per dollar, when reporting a drop in the average rate in the wholesale market Monex from ₡613,87 to ₡565,88.
In Costa Rica, it is expected that the downward trend that has been showing the exchange rate since February will intensify in the coming months, when the $3.580 million begins to enter as a result of the issuance of Eurobonds and loans granted by external entities.
According to data from the Central Bank of Costa Rica (BCCR), between the beginning of February and July 30 of this year, there has been a fall of up to 44 colones per dollar, reporting a drop in the average rate in the wholesale market Monex from ¢613.87 to ¢570.13.
Although Guatemala and the U.S. have already signed an agreement on migration issues, the exchange rate reported a slight increase and the upward trend is expected to continue over the next few days.
President Trump's warning to Guatemala to impose export tariffs and taxes on remittances and transfers had a direct impact on the exchange market.
Data from the Banco de Guatemala indicate that between July 23 and 29 the price of the Quetzal with respect to the US dollar increased from Q7.64 to Q7.68, which according to the authorities is explained by the uncertainty generated by the possible sanctions against the country.
In Costa Rica, exporters and businessmen of the tourism sector are concerned about the decreasing trend that in recent months has reported the exchange rate, which on July 18 was quoted at ¢575.7 per dollar.
Official figures report that between early February and mid-July of this year, there has been a fall of up to 38 colones per dollar, as the average rate in the Monex wholesale market fell from ¢613.87 to ¢575.69.
For the IMF, recent steps towards a more flexible exchange rate, especially by reducing currency surrender requirements, are positive.
The international organization encouraged the country to a gradual transition to exchange rate flexibility and to continue efforts to strengthen the operational autonomy and governance of the central bank with a perspective of a gradual transition to an inflation targeting regime.
In a competitive scenario for lower costs and higher productivity, devaluation against the Lempira Dollar in Honduras and the Cordoba Dollar in Nicaragua is a factor that could help these economies stay competitive.
In the last five years, the exchange rate in Honduras increased by 17%, from 21.06 Lempiras per U.S. dollar in June 2014 to 24.67 in the same month in 2019.
A greater supply of dollars, high local interest rates and a decrease in imports of durable goods explain the decreasing trend of the exchange rate in Costa Rica, which on June 18 reached the lowest level of the year.
In 2018, the dollar price against the Colon was on an upward trend, however, between February 6 and mid-June of this year, there has been a fall of up to 28 colones per dollar. [GRAFICA caption="Click to interact with graph"]
In the first four months of the year, trading volume totaled $3.873 million, 19% less than the same period in 2018.
From the Central Bank of Nicaragua report:
According to official statistics, the volume of exchange market operations in April totaled 924.7 million dollars (US$38.5 million daily average), showing a 0.97% decrease with respect to the level registered in the previous month.
The volume of operations totaled $2,948 million during the first quarter of the year, registering a 19% decrease with respect to the same period in 2018.
From the Central Bank of Nicaragua report:
The volume traded (purchases + sales) of foreign currency in the exchange market during the first quarter of 2019 was 2,948.3 million dollars (daily average of US$38.8 million), showing a decrease of 18.9 percent over the first quarter of the previous year, mainly because of the decrease in financial sector operations with the public.
In Costa Rica, the exchange rate of the U.S. dollar against the Colon began to rise in April, but from the 3rd to date, a fall of up to 12 colones per dollar has been reported.
After the average exchange rate against the dollar in the Monex wholesale market increased from ¢599.2 to ¢607.9 between March 29 and April 3, there have been continuous declines in the last few days, since as of this month's 17th it decreased to ¢595.8, one of the lowest levels of the year.