The Costa Rican government is facing a complex scenario, since by not achieving consensus to access international loans, it will be forced to seek domestic funding sources, which would put pressure on the exchange rate and interest rates to rise.
The economic crisis that the country is going through due to the outbreak of covid-19 ended up sharpening the country's fiscal situation.
The effects of the pandemic and fiscal uncertainty are the factors that explain the rise in the price of the US currency in Costa Rica against the Colon, which on November 4 was quoted at 614.55 colons to the dollar.
According to the figures of the Central Bank of Costa Rica (BCCR), between October 19 and November 4 the selling price of the dollar has shot up, rising from ₡605.24 to ₡614.55, which is equivalent to a 2% variation.
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.
Because of the growing supply of dollars in the local market, which is explained in part by the income of $1.5 billion from the recent issue of Eurobonds, so far in November the price per dollar in the wholesale market has been reduced at ₡16,55.
Official figures from the Central Bank of Costa Rica (BCCR) report a downward trend in recent weeks, as between November 5 and 22 the price has dropped from ₡585,52 to ₡568,97, equivalent to a 3% variation. See full figures.
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 the first seven months of the year, trading volume totaled $6,548 million, 20% lower than the same period in 2018.
From the Central Bank of Nicaragua report:
According to published statistics, in July there were lower pressures in the exchange market, which led to lower volumes of purchases and sales of foreign exchange, observing a reduction in the exchange gap when compared to those recorded in the same month last year.
In Costa Rica, the exchange rate closed on Tuesday, August 20th at 565.88 colones per dollar in the wholesale market MONEX, its lowest level since late May last year.
The exchange rate for this Tuesday closed at ₡565.88 in MONEX, its lowest level since late May last year. The current level implies an appreciation of the national currency against the dollar of 7.2% so far this year and -0.6% in the comparison of 12 months.
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.
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