Costa Rica Blog

Colon's 11% increase spurs Central Bank to Buy Foreign Currency

Posted by Steve Linder on Fri, Sep, 03, 2010

With the colon's increase in value this year topping 11%, it was the second highest appreciating currency worldwide.  In a reaction by the central bank to control the astonomical increase in the value, the bank has announced plans to purchase up to $50 million dollars per month in foreign currency to curb the rise in value of the colon.  The rapid rise in value of the colon will make both tourism and exports more expensive.  The central bank has traditionally allowed the colon to float in a range between 500 and 640 colon to the dollar but this week the colon approached the upper ranges in value, at 504 colons to the dollar. 

By purchasing foreign currencies, the central bank hopes to decrease the value of the colon.  The higher value of the colon makes real estate and exports more costly to international investors.  This is a good thing for the many North Americans who have already purchased property there, as the value of thier property increases.  It does make real estate more expensive for new buyers unless the property is priced in dollars, not colon.  Fortunately our prices at Pacific Lots are priced in dollars but as the dollar continues to lose money worldwide, there is pressure to change our pricing system to colons.  For those who have purchased property using a self directed IRA, the gain they realize over time reflects the increase in the value of the colon as well as the increase in value of the property.  As the dollar continues to lose value, more Costa Rican real estate, home sites and lots will be priced in colons. 

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Tags: Real Estate Costa Rica, Costa Rica real estate, Real Estate, Costa Rica Colon, property purchase in Costa rica, property, home sites

The Almighty Dollar

Posted by Steve Linder on Thu, Apr, 08, 2010

I predicted a while ago that the dollar would start to lose value versus other countries.  Many countries that many of think have fairly robust economies and stable currency have suffered in the past few years.  One country that has not suffered has been Costa Rica.  Unfortunately for us in the US, that is driving up prices in Costa Rica as the dollar slips against the colon.  This is both a good thing and a bad thing.  It is a good thing for anyone who'd taken their dollars and bought property in Costa Rica since as the dollar slips, the value of the land does not.  In fact those who own property there effectively make money when the dollar slips since the real estate market in Costa Rica is an international market and unless you are selling your property in dollars (most people don't) you are now getting more dollars than ever for your property.  I suspect you will quickly see developers in Costa Rica move away from pricing their properties in dollars since as the dollar drops, so does their revenue. 

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Tags: currency values, devaluation, Costa Rica Colon, US Dollar devaluation