The Number of Dollars Traded in Costa Rica Grow Exponentially: Where Do They Come From?

Tico economist Gerardo Corrales wonders where are so many dollars coming from in this country? He considers that it is an issue that should be discussed in the country, at least that is how he recommends it to the Legislative Assembly.

“Not even the Central Bank of Costa Rica (BCCR) itself has been able to give me a precise and concrete explanation of where so many dollars have come from,” Corrales said during a forum in which the behavior of the exchange rate was discussed.

Growing month by month

Data presented by the economist in this activity indicate that the difference between the sale and purchase of dollars in the private market was positive every month of 2022, that is, there was a surplus. They also reflect that this difference has been growing month by month since June.

During July, August, September, October and November, more dollars were traded than in the same months of the three previous years. In addition, during October 2022, $466 million was traded at the exchanges and it was the highest point of that year and of the last four.

But January 2023 broke the record again. The total came to $625 million. “Exports are growing, tourism is recovering and the operators require less dollars, there is more foreign direct investment. But the equation does not close for me: I have an excess amount of dollars offered in that market of doubtful origin, not to say it in another way,” said Corrales.

Irregular movements?

The economist said that these movements that he perceives as irregular could be distorting the market. Why so much real estate movement. Go to Santa Teresa, see the movement that there is today. Where do those dollars come from?

“It’s not that I’m against investment, but I am in favor of investing in well-gotten silver, not the one of suspicious origin that distorts the economy and relative prices,” he added.

Recovery plus additional prize

José Luis Arce, also an economist, believes that the increase in the number of dollars responds to other factors. According to his criteria, the country has gone through structural changes that lead to this condition, in general terms, more exports and more tourism.

However, he said that during the last months in particular the country is recovering from a “complex shock” that reduced the supply of foreign currency in 2020. In addition, he said that this recovery came with an “additional prize.”

It is about the recent installation of transnational companies (such as those that provide business services) that choose the country for geopolitical reasons and that hire personnel in Costa Rica.

“Those workers who receive income in dollars come to feed the offer that we have here,” he commented. He added that, by itself, the private exchange market has a surplus in Costa Rica, although he acknowledges in recent months “a little higher.”

Productive group expresses concern

This past Wednesday, February 1st, different actors from the productive and commercial sectors of Costa Rica organized an event in which the behavior of the exchange rate was discussed.

Representatives of tourism, export, agricultural and other activities expressed their concern, since the appreciation of the colon is leaving them losses and, according to them, reduces their competitiveness.

Several actors in the national economy have asked the BCCR to play a more active role to stabilize the exchange rate, as happened in mid-2022, when the previous administration intervened to stop the devaluation registered at that time.