www.CostaRicaTicas.com

It really wasn't stable at all until about four years ago. The CR currency stopped floating against the dollar and the central bank controlled the currency within trading bands. This policy was renewed about a year ago.
The actions controls inflation but undervalues the dollar.
I read one article from an economist in which he thought if the dollar was allowed to float it might be 640:1

I'm not an economist nor do I follow currencies, but these posts made me think about the late 80's when I remember it at app 250 colones to 1 USD.

Found this site: http://www.xe.com/currencytables/?from= ... 2011-12-22

The earliest conversion data for US-CR this site will yield is for 1998.

At the end of 1998, a buck would give you 269 colones.

99=293.
2000=339
01=339
02=375
03=404
04=456
05=495
06=517
07=500
08=547
09=555
2010=496
11=501
12=499.

I'll let other guys with those kind of smarts interpret this data but it looks like WiseAsh was on to something in that starting in 2010 the spiral of 293-1 in 1999 to 555-1 in 2009 (what's that an app 75% increase?) stopped to a rather consistent 500 ever since.

Their is an anticipation, that when tapering starts in the USA, the dollar will appreciate in CR. The chain of events will be:
Interest rates rise in US
Dollars coming into CR will decrease as dollars will earn a higher return in the US
Creating a shortage of US currency in CR
Exchange rate of dollar to colones will increase
Coming to CR with your more valuable dollars, everything will cost you less
Possibly

Interest rates have already risen (almost doubled) and Dollar has done NOTHING essentially. Tapering is already discounted in the market and when it finally is begun, possibly October...possibly December...the reaction will be pretty muted and the process of tapering will be a very slow and gradual one. The big interest rate shock has already happened and, if anything, they may come back down. A Yellen appoinment is also likely to be US Dollar negative because she is so dovish. Probably of greater importance for the US Dollar will be the eventual outcome of upcoming budget negotiations...debt ceiling..government shutdown or not. If those don't go well, it could be a big NEGATIVE for the US Dollar. I have no clue about the outcome. The other ingredient needed for materially higher interest rates is a much more robust economy. That does not appear to be in the cards.

Both of you are obviously very smart as opposed to me in this economic/financial regard.

Safe to assume though that the Colone exchange rate to US at app 500-1 has deliberately been held in check past 4 years by CR manuevers.

What is your prediction, in laymen's terms, of colones to dollars in the near future. We all know it's a prediction and volatile and something that could change in a hot second so nobody is going to hold you to it. I know also WiseAsh is not a pro, nor either of you are privy to the best info as it relates to CR. But other then the extroidinaire happening and assuming the status quo persists, can CR continue to maintain a roughly 500 colones to 1 dollar exchange even though it may be an artificial value? Can they pull that off indefinetly?

We all probably welcome some other guys opinions who have some expertise worthy of an informed opinion.

I don't know enough about the local CR economy to make a prediction other than to suggest that in all likelihood it will probably remain in that range close to 500 give or take a little bit. That's based on the premise that the US economy...Europe and Emerging Markets will continue to experience "sluggish" growth with global interest rates remaining relatively low and not a great deal of excitement and/or volatility. Take my thoughts with a grain of salt.

Banks in CR offer 7 to 8% CD interest. This is down from previous 11%+/-

This begs the question, do you have to be a CR resident to open an account there? At that rate, I wouldn't mind putting some money in a CD there.

Sent from my SCH-I545 using Tapatalk 4

A resident or have a CR SA (corporation)

Of course not - if you could do so in dollars - I'm under the impression - correct me if I'm wrong, Wiseash - that accounts paying that rate are denominated in colonies - so you have a currency risk

When you open a bank acct in CR, they open 2 accounts. 1 in colones and 1 in $. Cd rates for colones are above and $ are around 3%. Yes you have the risk of currency fluctuations.
You have to be a resident or have a CR SA.

This begs the question, do you have to be a CR resident to open an account there? At that rate, I wouldn't mind putting some money in a CD there.

Sent from my SCH-I545 using Tapatalk 4[/quote]


Of course not - if you could do so in dollars - I'm under the impression - correct me if I'm wrong, Wiseash - that accounts paying that rate are denominated in colonies - so you have a currency risk[/quote]

When you open a bank acct in CR, the open 2 accounts. 1 in colones and 1 in $. Cd rates for colones are above and $ are around 3%. Yes you have the risk of currency fluctuations.
You have to be a resident or have a CR SA.[/quote]




Thanks WA

So if I am reading this correctly the current interest rate for a CD in colones is 7-8%, in dollars 3%? Sorry if I read this part of a good thread wrong.

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http://www.costaricantimes.com/colon-to ... ised/21333.
So what does this news add to the equation?

In September 1998 on my first trip it was 278 to 1 .