Don’t expect your dollars to be worth more anytime soon

October 9^th, 2012 – Eight out of ten economists believe that factors causing the appreciation of the Costa Rican colon will continue or hold steady until at least 2015.

While some economists are concerned about the colon’s higher value on exports, others believe the export community has already absorbed the majority of the pressure.

What seems likely, though, according to economists, is that the dollar exchange rate will remain at around 500 colones to the dollar until 2015.

These are the results of research conducted by the economist Ronulfo Jimenez, as part of a project called “Inteligencia Financiera” (Financial Intelligence), for the national financial periodical, El Financiero.

Some economists are also blaming the over-abundance, and hence the downward pressure on the value of dollars on the high interest rates paid on colon investments in Costa Rica, which is attracting foreign investors and foreign exchange of dollars for colones.

Another large percentage of the economists surveyed believes that the main cause is actually the expansive policies of the United States Federal Reserve. At an international level, these policies are expected to continue until mid 2015, which would have further effect on the exchange rate.

Some of the respondents also believe that despite the fact that the export sector already absorbed part of the impact of the decrease in dollar value, one sector that will continue to be affected is the agribusiness export sector, which has less capability to react to the exchange rate.

For the time being, the problem does not seem to be reflected in overall export numbers. Exports in products in 2011 increased 21%, and in the first semester of 2012, export growth had already reached 22%.