Costa Rican Colón Strengthens Slightly as Dollar Faces Rate Pressure

The U.S. dollar has slightly softened against the Costa Rican colón since its early-October rebound, but the Central Bank of Costa Rica (BCCR) warns that rising U.S. interest rates could drive the dollar higher again. Today’s exchange rate stood at ₡454.50 to buy and ₡460.35 to sell, a minor improvement from yesterday’s ₡455.71 and ₡462.08.

On the Foreign Currency Market (Monex), the dollar peaked at ₡460.45 on October 1, a 3.1% increase from its record low of ₡446.80 on September 17. By October 2, it eased to ₡458.67, ending a five-day streak of gains. The average rate on October 5 was ₡457.03, with about $68.7 million traded.

BCCR President Róger Madrigal cited the widening gap between Costa Rican and U.S. interest rates as the primary risk. The Central Bank lowered its rate to 3% in July, while the U.S. Federal Reserve raised its benchmark rate to 3.75%, 4% in September. Madrigal warned that higher U.S. returns could shift demand toward dollars, increasing upward pressure on the exchange rate.

However, economists have differing views. Fernando Rodríguez of the National University (UNA) argued that maintaining a 3% policy rate would keep Costa Rica attractive to investors, sustaining dollar inflows. Meanwhile, Federico Quesada Chaves of the State Distance University (UNED) suggested seasonal factors like aguinaldo payments and holiday spending could weaken the dollar in late October.