- Category: Business
- Published on Tuesday, October 19 2010 23:41
- Written by Rod Hughes
- Hits: 1065
For about 18 months or more the Costa Rican currency has been on a roller coaster, spurred by speculators and fluctuations in the dollar. As of Monday, a weakening dollar had the value of U.S. currency against the colón at ¢498 per dollar.
This is a ¢60 drop for the dollar from ¢558 last January. It's not the first time the colón has dipped below the ¢500 mark. Economists predicted a strengthening of the dollar by year's end but the most recent pattern is raising doubts about that prediction."The buy value (of the colón) typically drops around the middle and beginning of each month due to an increased demand for the colon for salary payments," Tico Times business writer Adam Williams observed.Since 2000, the colón has depreciated ¢20 against the dollar. But in 2010, that was reversed with the dollar depreciating nearly 11% against the value of the colón.
Costa Rica's Central Bank gets a lot of pressure from exporters when the colón gets too robust because it raises their products' sale prices in the U.S., the country's biggest trading partner. Thus, Tico products are more expensive and suffer from a competitive disadvantage.
With exports vital to this country's economy and a huge employer, that is not good news for Costa Rica. (See this article on export business employment.)