The U.S. dollar has reached its lowest levels against the Costa Rican colón in almost two decades, closing at ₡487.26 in the Monex market last month. This marks the weakest point for the dollar since the market’s inception 19 years ago. Market watchers attribute the shift to a combination of robust tourist inflows, falling global oil rates, and the steadiness following the February presidential vote.
The dollar’s decline began accelerating in late 2025, with the currency dipping below ₡500 by November. It hit ₡498 that month, the lowest since 2014, and continued downward to ₡490 in December, a level not seen since 2005. By January 2026, the average weighted rate settled at ₡487.26, reflecting a persistent surplus of dollars in the system. Central Bank data shows the colón has appreciated by about 12% against the dollar over the past year, driven by external factors that have flooded the market with foreign currency.
Tourism plays a central role in this movement. The high season, running from December through April, has brought a steady stream of visitors, particularly from the United States and Europe. This influx injects millions in dollars through spending on hotels, tours, and services.
Yet, the stronger colón raises prices for these travelers, making Costa Rica less affordable compared to neighboring destinations. Tourism groups have voiced concerns, noting that the exchange rate squeezes profit margins for operators who rely on dollar-based earnings. One analyst from the National Chamber of Tourism said the trend tests the sector’s resilience, as higher local costs deter budget-conscious visitors.
Falling petroleum prices add another layer. Global oil has dropped by around 14% from 2024 levels, reducing the need for dollars to cover fuel imports. Costa Rica, which imports most of its energy, saves significantly on these bills. Lower oil costs also ease pressure on transportation and manufacturing, indirectly supporting the colón by curbing dollar outflows. Economists note that this dynamic echoes patterns from past oil slumps, where import savings bolster the local currency.
The recent elections further stabilize the picture. Voters elected Laura Fernández Delgado as president in the first round on February 1, extending the policies of the outgoing administration. Her win signals continuity in economic management, which investors view positively. Post-election calm has encouraged capital inflows, including remittances and foreign direct investment.
While many party platforms overlooked exchange rate specifics during the campaign, the outcome has reinforced market confidence. Analysts point out that this political steadiness, combined with low inflation near zero, creates an environment where the colón holds firm.
Despite these gains, the shift carries mixed effects across the economy. Exporters face headwinds as their goods become pricier abroad, potentially slowing sales of key products like medical devices and agricultural items. The trade balance shows exports growing, but at a pace tempered by the exchange rate. On the flip side, importers and those with dollar-denominated debt benefit from cheaper repayments and lower input costs. Households see some relief in imported goods, though the overall impact on living expenses remains uneven.
Looking ahead, forecasts from institutions like Bank of America suggest the colón could average around ₡500 per dollar through 2026, assuming no major disruptions. However, ongoing geopolitical tensions and potential U.S. policy changes could alter this path. The Central Bank has intervened sparingly, buying dollars to moderate the appreciation and maintain liquidity.
This currency strength shows Costa Rica’s economic progress but also underscores the need for balanced policies. As the new administration takes office, addressing competitiveness in tourism and exports will be key to sustaining growth without sacrificing stability.
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