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Aruba, November 30, 2011 - For the second straight year, the Costa Rican colón will likely appreciate against the dollar, largely due to the upcoming holiday shopping season.

For the first time since 1984, the colón is on pace to appreciate against the U.S. dollar for the second year in a row. Since Nov. 1, the colón has appreciated 12 colones against the dollar, falling from a buy value of ₡509 per dollar to ₡497 on Nov. 23. On Jan. 1, $1 was worth ₡507.

The month of December is expected to bring further appreciation of the colón. Traditionally, given the increased amount of colones in the marketplace during the holiday season, demand for colones is higher than at other points of the year. Costa Rican employees also receive annual aguinaldos (Christmas bonuses), the equivalent of one month’s salary, during December. National income tax payments, paid in colones, are due by Dec. 15, and annual vehicle circulation permit payments, or marchamos, are due before Dec. 31.
“The exchange rate has been dropping, which is exactly what is to be expected near the end of the year,” said Hernán Varela, risk adviser at the consulting firm Aldesa. “Consumers and businesses are changing dollars for colones to pay aguinaldos, payroll and taxes. Most businesses pay the majority of their taxes at the end of the year, which pushes the exchange rate lower.”

Varela said that he expects the exchange rate to continue to slide until mid-December, followed by two more stable weeks to end the year. Given those predictions, it is likely the exchange rate will finish 2011 at a lower value.

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