The brief reply to this question is: overvalue the federal currency. That’s just what Costa Rica has been performing for at least two decades. But in the majority of years the national rate of inflation surpassed by several percentage points that the devaluation rate. In 2006 the Central Bank altered the mini-devaluations using a system of rings where the colon has been permitted to float between upper and lower limits together with the upper limit slowly rising, in July 2010 reaching 610 colons for a single buck with an earth of 500. Then, starting in October 2009 the colon acquired worth, the market rate kursdollar.id falling from 590 at October 2009 to 510 in May, 2010. If it lasts for any period of time that the Costa Rican market will greatly suffer.
An overvalued currency accidents exports, subsidizes imports, exacerbates balance of payment issues, negatively impacts tourism and overseas residents with dollar incomes, deters foreign exchange, inflates property costs, and invites money speculation.
Costa Rica has a market highly determined by export earnings. If exporters attempt to maximize their costs to compensate for a weak dollar a powerful colon signifies not as competitively priced goods on global markets. If costs cannot be raised, as is ordinarily true, companies must pay their operating costs in colons while getting fewer in exchange for those dollars earned– 92 percent of export earnings are in dollars, but 70 percent of prices are at colons.
This has the negative result of promoting export of products that compete with locally established manufacturing. The consumer products sector in Costa Rica is comparatively well-developed, with a few industries too targeted at exporting to Central America. Historically, domestic production has become some extent protected from import tariffs. The combination of an overvalued colon and also the removal of protective tariffs may indicate that some industries of domestic sector will proceed.
While the market started to recover in late 2009 in the worldwide caused downturn, Costa Rica keeps a chronic issue with balance of payment deficits. The combination of decreased or reduced appreciated export earnings and raised import costs impels the balance of obligations into additional shortage. Throughout the very first loaf of 2010 exports, direct by carrots and pineapple,