Exchange rate

Beginning today (October 17, 2006) there is a new exchange rate system in Costa Rica, as the Banco Central de Costa Rica (BCCR) – Central Bank – announced last Friday evening that individual banks would be allowed to set their own exchange rate within a range of low and high, known in Spanish as “banda cambaririas”.

The opening floor of the exchange rate of the Colon to the U.S. dollar was set by the Central Bank this morning at ¢514.78 and the celieng at ¢530.22. Individual banks – both state and private – and financial institutions can offer an exchange rate between the floor and ceiling, which will be posted on the Central Bank’s website for consumers to compare.

The Central Bank, in an attempt to avoid confusion has also established a “reference rate” that can be used as a guide for currency exchange transactions, like paying a dollar rent in colones or vice versa.

The “reference rate” is the same as the closing exchange rate on Friday: buy is at ¢521.12 and sell at ¢523.39.

The Central Bank is not setting the exchange rate, allowing financial institutions to set their own rate within the range. Each financial institution will be required to report their rates to the Central Bank within 10 minutes of any changes.

The move is to reduce inflation because Central Bank is in deep debt caused by its policy of shoring up the colon against the dollar. The bank has spend millions of dollars per year on the mini-devaluations over the last tow decades since the policy was instituted.

Costa Rica president Oscar Arias said on Saturday that he is pleased with the decision of the Central Bank’s board of directors to finally implement the free market exchange rate, adding that the move is will help the economic situation in Costa Rica as inflation is lowered and less dependency on dollarization.

What the change means in real terms is that before making an exchange currency one has to consult the Central Bank’s website to compare the rates offered by the various institutions.

The Central Bank will monitor the exchange rate situation and says it will adjust the high and low limits depending on the marker conditions, allowing individual financial institutions to adjust their rates up and down as the market conditions change.

The rate, according to the experts, will be determined by the amount of dollars in the market place.

For example, if there are too many dollars available and there is no demand, the financial institutions will keep the exchange rate close to the low end of the range, as they will be forced to sell back to the Central Bank at the low end. However, if there is a high demand for dollars and little supply of the currency, the rate will be on the high end and will increase with the market conditions.

The colon could easily reach a high of ¢600 by the years end, much higher that if the Central Bank were continuing with its mini-devaluation policies.

The Central Bank says that the change is temporary, that is it could be changed at any time. However, it is important to note that the last monetary policy lasted 22 years.


Investor status

To file for residency under investor status in the tourism industry an investment of $50,000 is required.  The hitch to this is that any other family members that you think would be covered under this type of investment is not.  This would only give the primary investor residency and spouses and dependant children would not have residency under investor status.

Many people file under Rentista status even though they are coming here to start a business in the tourism industry so that the whole family can be taken in under the visa status. Our attorneys have assured us Rentista is the best way to go for a family.



The Costa Rican Investment and Development Board has been officially commissioned by the government of Costa Rica to be the main promoter and advisor to foreign investors. CINDE is a private, non-profit organization that provides complete and updated information on the economy and business environment in Costa Rica, and helps in the initial contact with potential investors. It has an office in New York to provide tailor-made services.


Investment alert

Please be aware that many business and investmemt opportunities in Costa Rica are neither regulated nor approved by any financial regulatory agency. Also, remember that the regulations governing investments in Costa Rica are not as strict as they are in other countries.

While legitimate opportunties exist, so do scams and extremely risky ventures. Investing in Costa Rica can be much like gambling, and everyone should keep in this in mind and invest accordingly.


Offending people

As an American I have a rather brash straightforwardness about me when it comes to business. This is not taken kindly in Costa Rica. If you question someones ability to do their job they get very, very offended. If you raise your voice at someone forget it, you might as well have slapped them in the face.

I’ve been here several years and while I know all of this, I sometimes backslide when something takes me off guard.

I’ll give you an example….yesterday I asked a realtor (whom I didn’t agree with the price they were asking for a place) if they actually knew the area that this house was in and how much property goes for in that area. In my opinion it was very under-priced. Today I get an email from that person telling me that I had really offended them and they didn’t want to work with me anymore.

Now I have to contact this person and apologize for offending them if I want to continue to working with them, which I do. But this is just a small example of how easily Costa Rican’s can be offended and how you must deal with it if you want to live in their country with their culture. They are very kind people and wouldn’t question if you knew what your doing for anything, so they can’t understand nor appreciate why we would. Another lesson learned by me this week.