Why The Dollar Vrs Costa Rican Colon Has Decreased Considerably In Last Weeks

Source Central Bank of Costa Rica

The reduction from the last weeks in the exchange between the Dollar and the Costa Rican Colon has brought the price very close to the same price of 2021 as of the current date, this is something that will affect the operation of the individuals and companies that make their income in dollars and pay their providers and employees in colones, this due the affordability of the same amount of dollars for paying dues in colones (majority of providers of companies in Costa Rica) will be considerably reduced, as an example shown below:

On a company that received the majority of their income in USD, a set of vendor payments and payroll for an amount of $50,000 in august was able to pay 33,000,000.00 colones to vendors, the same $50,000 today september 20th can pay only 31,250,000.00, means 1,750,000.00 ($2,800) less compared to one month before, in a relative analysis, this is the equivalent to 5.6% reduction in the payment capacity of the same dollars one month later.

The reason for this was that the gradual historic increase in the dollar value against the colon was replaced by an uncontrollable raise due the increase in the gas prices as an effect of the international oil cost due the conflict between Russia and Ukraine, also added to this the effect of the reactivation of the economy after the pandemics caused the CRC to increase its value against the USD, the government created a contingency to pull the break into the increase on the price of the oil derivated products, stabilizing the prices and that caused the dollar value to collapse in a very short term, economists say that this temporary since there is Costa Rican debt bonds in USD and EUR that is about to enter the international market which might stop the decrease in value and bring the up trend again back in November and December, not only by the effect of the debt emission but the regular trend at the end of the year as you can see in the graph due the hign volume of transactions due the acceleration of the economy due the year end holidays, christmas bonus payments and also the impulse caused by black friday and other sales impulse movements that happen yearly in the same dates at the end of the year.

In ConsultantsCR we’re business advisors with a wide variety of services and high amount of experience, if you need assistance regarding the operation, legal, financials and tax planning on your business don’t hesitate to contact us for an initial free consultation call or meeting, you can email us to info@consultantscr.com or direct whatsapp at +1 917 9938055.

Published by rdavidfallas

Blog writter & consultant.

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