Ron Olsthoorn agrees it’s a good time to travel and invest in this country. Factors such as a floating exchange rate in a growing economy make United States involvement a reality.
Tico Times of San Jose, Costa Rica, reports that the national currency, the colon, is finally stable and holding. The USD currently trades at around 500 CRC, “with the colon actually gaining value against the dollar in…2012.”
This is good news for travelers and investors. They now should buy and invest in colones, not dollars. A traveler using dollars may need to shop around for a rate, which can rise and fall with the market. They may be offered 510 to 526 colones per dollar at restaurants or hotels, for instance. A higher exchange rate is obviously better.
Additionally, the CRCs exchange rate is currently doing better than that in other top travel destinations. An American traveler can get more bang for his buck inCosta Ricathan most any other place listed by CNN or Lonely Planet.
Around September 2006, the Central Bank ofCosta Ricaopted for the colon to float between buy/sell exchange rate bands or limits they established. Market volatility thus would drive exchange rate. State and private banks set their own exchange rates instead of the Central Bank as long as they fell within the established guidelines. If the rates went too high or too low, the Central Bank would intervene to keep rates reasonable.
The “lower band” was set at 500 CRC to the dollar and has hovered there ever since. One USD, therefore, buys or is exchanged for around 500 CRC.
Central Bank action prevented the colon’s further devaluation, stabilizing the exchange rate since about 2007. Some sources note the colon actually began to increase in value against the dollar starting as early as October 17, 2006. However, Tico Times indicates the colon’s devaluation generally slowed from an 11.18 percent average to 0.71 percent over the past 30 years.
This action will not only correct dollarization, or using dollars versus colones, but should improve economic vitality, attracting American tourists and investors. Dollar devaluation could allow lower interest rate borrowing, and economic growth should improve tax revenues.
While the effects largely remain to be seen in light of national debt causing infrastructure problems, Japanese stockbrokerage firm Nomura Securities International projects a GDP gain over inflation. High-tech manufacturing and tourism, parts of foreign direct investment, are major, ranked revenue sources of the expanding economy. In fact,Costa Rica—Central America’s second-biggest–is theCaribbeanand Central American 2011-2012 Country of the Future for its foreign direct investment. This Latin American country generates billions annually in tourism income as the most visited place inCentral America. In fact, tourism specialist Ron Olsthoorn notes that tourism revenues surpass those of bananas and coffee.
To Ron Olsthoorn, there is no better country to visit thanCosta Rica. Ethical Traveler Magazine names it a top 10 ethical travel destination in the developing world. The New Economics Foundation rankedCosta Ricagreenest and happiest in the world in 2009. In 2012, the country reprised its role on the Happy Planet Index.Costa Ricaalso ranks repeatedly on the World Economic Forum’s Travel and Tourism Competitiveness Index.
CFP Ron Olsthoorn is project manager of Vista Bahia, a condo development that will be built this year and begin renting in 2014. He is an avid traveler to Costa Rica and especially loves visiting the town Dominical on the country’s southwest corner.