www.CostaRicaTicas.com

Ok, maybe I just don't understand economics. However, consider that from what i've read on this board, a few years ago the dollar -> Colone was 1 -> 250-300. Girls at the HDR costed about $60 on average. Now, on average, they want $100 at 1 ->500, which means the price has gone up almost 400%. Now, with the dollar value deflating, they'll want to charge $120 or $150 at 1 -> 400.

Is it really worth that?

Mr german-
I could be wrong, but I believe that the colon hasn't been in that range since I started coming to CR, about 8 years ago

Saying whats the big deal the colon was xxx to the dollar when I first came to CR x years ago misses the impact of devaluation of the dollar totally.

Yes the colon was xxx to the dollar x years ago but the price of goods and services is no longer the same xxx colones to the dollar as it was in those years. The price has steadily risen in direct relationship or more to the rate of inflation is CR. The effect of the steady devaluation of the colon was to temper the effect of inflation. The rise in the value of the colon no longer buffers the inflation which runs anywhere between 10 to 14 % in the past years.

A quick simple example. On November 20 a pineapple cost 617 colones at Mas x Menos. The exchange rate was 517 to the dollar so the pinaapple cost $1.19. On Nov 22 the $ was devaluated 4% to 497 colones but the pineapple was still priced at 617 colones so the cost was now $1.24. If the dollar is devalued another 4% this week and the pineapple is still priced at 617, which is will be that or higher, the cost will be $1.29 (617 ./. 477)

A devaluating dollar raises the prices of everything that is priced in colones and makes CR a more expensive place to live or visit.

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Pura Vida
Only Irish coffee provides in a single glass all four
essential food groups:
alcohol, caffeine, sugar and fat.
Alex Levine

But ID, we ain't buying pinaapples, we're buying pu*sy. LOL! Just kidding.

I have a Colon account and a Dollar account at a local bank. I plan to xfer all the dollars to Colones asap. The sky isn't falling (yet) but you might consider carrying an umbrella.

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"The only normal people are those you don't know very well." Joe Ancis

The same has happend the past 2 years against the Colombian Peso. The dollar has lost over 20% of its buying power in Colombia...which is why hotel rooms, transportation and other costs have gone up in almost direct proportion to the dollar deval. Some of you budget mongers are just going to be stuck at home in the USA looking for gringas...or transplanted latinas with gringa attitudes...

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All that a man achieves and all that he fails to achieve is the direct result of his own thoughts...

At the rate it is going it will not be "some" of us but most of us. At the same pace in 3-5 year Brazil, Europe CR would be double in cost from where they were two years ago and I imagine Colombia would not be far behind. This could become a sport for the wealthy or something many people far fewer times a year.

I really hope the future holds a strong US dollar and a United States that's reducing its debt, maintaining infrastructure, protecting its borders, and investing in its people. It is going to take coordinated and determined leadership plus a united country willing to make some sacrifices.... so there goes all hope.

Unfortunately I believe we may not see great strides regarding the value of the dollar until 2009. According to a pal of mine who works in finance/international trade says if the fed cut rates again the dollar will take a further hit.

I've said before that the dollar will come back. I'm not sure what it will take since there are many things that go into valuing currency, but I'm sure it will come back. I'm also not sure when. I do remember when a British Pound could be bought for $1.01 (early 80s) and now you pay over 2 dollars for the BP. Historically, the BP was around 1.70 give or take 10 or so cents. A lot of people want a strong dollar especially in Europe where they said that if things remain the same for too long, AIRBUS will go out of business unless it moves production to dollar dominated locations. I would imagine CA and SA would like to see a stronger dollar as well. Philippines would love to see a strong dollar - many of them, who are working abroad are paid in dollars, so it doesn't add up as much when sending $$ back home (peso was at 61 not so long ago... now 41). My best friend who sends money to Brazil has been crying the blues for the last 2 years.

My first trip in 1998, all the chicas in the Del Rey wanted Cien, but settled for $50 or $60 in colones (at the time about 15K colones). Last month all the chicas in the Del Rey wanted Cien but settled for $50 or $60 in colones. Although Hotel prices have gone up, most recreational choices (eco tours and chicas) have remained the same in dollars (although about double in colones). No complaints.

If it gets too expensive then eventually we will not visit as much or not at all and then when there are not as many of U.S. tourists (90% of the market total not just the sex tourists) they (the C.R.) could have some serious financial difficulties like Argentina had in 2001. They better not get too snotty like the AR did.

I visited AR in 2005 and enjoyed it but no way in hell I would pay $240-$300 (2001 prices before devaluation) for a small average hotel room in BsAs or U.S. prices for everything else. No fokkin way. Just not that great a place.

Then the counter argument is all the European and Canadian tourists will start coming more and more to the c.r. Yes more will come but this in turn will mean less travel to Europe and that in turn will drive prices down there. The fall of the dollar is only good for those who can afford to travel in the U.S. Not good at all for the European economy. After this sub-prime mess gets works out the dollar will rise again.

If you can safely convert dollars to Colons without it being stolen from local banks by all means convert some but I in no way would recommend a total conversion.

This is a very interesting topic with global implications as well.

The CRT Economist

If the dollar continues to be devalued against the colon that $50 or $60 in colones is going to cost you more dollars so they price is increasing. If you want to pay in dollars then they are going to want more dollars because when they use your dollars to buy colones to use in every day commerce they are going to get less colones for each dollar.

Make no mistake a devaluating dollar is going to raise prices and trying to spin it any other way is voodoo economics.

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Pura Vida
Only Irish coffee provides in a single glass all four
essential food groups:
alcohol, caffeine, sugar and fat.
Alex Levine

So far we have seen only the beginning of what will probably be a long process of dollar devaluation. First was the change from automatic re-evaluation to the periodic readjustment system (I don't know what it's called, officially). We saw the first readjustment just a short time ago and the next one is expected very soon. I suspect that the Central Bank of CR is using the slow boil. The article says that a realistic exchange rate is around 400 to 1. That leaves us a little less than 20% to go. And make no mistake about it, local prices are rising. I paid 9000 at the Molino Rojo last night. As a benchmark I think it's pretty reliable. Costa Rican wages and rents are indexed upward. Prices in Colones will go up, count on it. The dollars we bring from home will buy us less. You may be able to bargain your way to a good deal in the Del Rey but less volatile prices are unquestionably on the way up as the exchange rate goes south for us gringos.

For those who expect the dollar to 'bounce back' I'd like to hear any reason it should based on real economic reasons rather than technical reasons.

It's not just the Colon, either. Exchange rates are very nasty all over the world for those stuck with the dollar. There are and will always be cheaper places to live than Costa Rica, but I expect the falling dollar will result in a steady erosion of buying power for all expats. I don't expect it to ever get bad enough to make me want to return to the USA or move to the Philippines but that may be the answer for others.

For your further 'enjoyment,' a few links:

http://www.economyincrisis.org/
http://www.nakedcapitalism.com/
http://www.rgemonitor.com/blog/roubini

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"The only normal people are those you don't know very well." Joe Ancis

The dollar has lost 15 to 20 percent over the last year most places I have traveled outher than CR so just a matter of time until it hits there.rbc100

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In Search of Fine Kittens,
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