Why Costa Rica’s Record-Strong Colon Is Squeezing Its Tourism Boom

Costa Rica, a leading ecotourism destination, is having a record tourism year while its industry says it is in trouble. The colon, the national currency, has just hit a record high, and that explains the paradox.

The colon closed at 446.93 per dollar on 16 September 2026 on Monex, the central bank’s electronic currency market. That is the strongest level since the Central Bank of Costa Rica’s records began in December 2007.

Why This Matters

Tourism is one of Costa Rica’s main sources of foreign currency. The country became known as the poster child of ecotourism in the early 1990s.

Since 1999, tourism earnings have exceeded the combined exports of bananas, pineapples and coffee. Tourism revenue in 2025 came to US$5.571 billion, about 40% above the 2019 level.

The United States supplies the majority of visitors, so demand depends heavily on American travellers. That makes the exchange rate a question of jobs and income for a country of about 5.2 million people.

The currency also tests the government of President Laura Fernández, elected in February 2026 with 48.3% of the vote. Tourism chambers warn about the currency, while households that earn colones benefit from cheaper imports.

The Currency Move, Measured Properly

The reference rate on 17 September was 443.43 colones to buy a dollar and 448.21 to sell one. The Monex close of 446.93 on 16 September was the fifth consecutive record session.

The comparison that matters is with June 2022, when the market peak was 696.76. From there to here, the dollar has lost about 36% of its value in colones.

Expressed the other way, the colon has gained roughly 56% against the dollar. Both numbers describe the same move, and coverage often mixes them up.

Why a Strong Currency Hurts a Tourism Business

Hotels, tour operators and restaurants take payment in dollars from foreign visitors. They pay wages, rent, electricity and food in colones.

When the colon strengthens, the same dollar of revenue buys fewer colones of costs. In the first quarter, tourism earned more dollars than two years earlier.

The colon equivalent rose under 2%. Economist Alberto Franco told the Tico Times that the appreciation neutralised the effect of higher arrivals entirely in that quarter.

But the Volumes Are Up, Not Down

Costa Rica received 2,191,432 international arrivals from January to August 2026. That is 5.3% more than the same period of 2025.

Arrivals by air rose 5.8%, and the first quarter was the strongest first quarter in the country’s history. It was also the first quarter of any year to exceed its 2019 equivalent.

For comparison, the country received about 3.14 million visitors in the whole of 2019. So the sector is earning more dollars from slightly fewer people than before the pandemic.

The Warning Sign in the August Numbers

August broke the pattern. Air arrivals fell 5.9% against August 2025.

Visitors from the United States were down 13.9% in the month. That matters because the United States supplies the majority of Costa Rica’s visitors.

June was also slightly negative. Two negative months in three is not yet a trend, but it is not nothing.

The growth this year has come from elsewhere, with Canada up 24.8% and Europe 8.8%. Central America, the closest and most price-sensitive market, is down 5.8%.

What the Industry Says

The Costa Rican Hotel Chamber says occupancy has drifted slightly but consistently downward over recent years. It says high seasons beat targets, while low seasons run below normal.

The Costa Rican Restaurant Chamber says a strong currency makes foreign travel easier for locals, moving spending abroad. The travel agents’ association says higher revenues have not yet covered the losses from the currency effect.

Food service and lodging activity growth slowed to 2.6% year on year in June 2026, the weakest reading in five months. The chambers’ figures show pressure on margins, not a fall in demand across the year.

The Jobs Figure That Is Being Misreported

A widely quoted number says Costa Rican tourism lost about 22,000 jobs. That figure comes from a university study published in November 2025, covering late 2024 to late 2025.

It is ten months old and describes a period that has since turned. The official series shows tourism employment at 167,661 in the second quarter of 2026.

That is 1.7% above the same quarter of 2025, the first annual increase since the decline began. It is still 11.3% below the peak of 189,093 reached in the third quarter of 2024.

The Part Nobody in the Sector Mentions

Short-term rental listings in Costa Rica have more than doubled since 2019. They went from about 22,500 to 48,985 by June 2026, across 243 local markets.

Occupancy across that inventory runs at about 43.7%. Falling occupancy with rising arrivals and doubled supply is an oversupply problem as much as a currency one.

The chambers complaining about occupancy are not the operators adding the listings. That split matters for any policy aimed at helping hotels.

What the Central Bank Has Actually Done

The Central Bank of Costa Rica cut its policy rate to 3.00% on 25 July 2026, from 3.25%. The stated reasons were negative annual inflation and slowing activity, not the exchange rate.

The larger response has been in the market itself, where the bank bought US$767 million between February and April. That is within four million dollars of the record for a full year, set in 2017.

On 16 September it bought US$24.7 million in stabilisation operations, from US$58.87 million traded. Its position is that it smooths volatility rather than defending a level, and that is the sector’s complaint.

Why the Colon Keeps Strengthening

Private-sector income in Costa Rica is heavily dollarised, from services exports and foreign investment. State enterprises buy their dollars directly from the central bank rather than on the open market.

So the supply of dollars in the market chronically exceeds the demand for them. That is a structural feature, not a policy choice, and it is why intervention alone has not reversed it.

Unemployment, meanwhile, was 7.0% in the second quarter. Informality, meaning work without formal contracts or social security, stood at 36%.

What It Means If You Run a Business There

If you earn dollars and spend colones, the squeeze is real and the central bank is unlikely to fix it. If you earn colones, the strong currency is quietly making imports and foreign travel cheaper.

A devaluation would transfer income from the second group to the first, which is why it is contested. For hotels, the more actionable variable is supply, not the exchange rate.

For visitors, Costa Rica has become more expensive in dollar terms, because local prices set in colones now cost more dollars. The number to watch is American arrivals in September and October, not the daily currency print.

What Is Not Yet Known

Whether the August decline in American visitors continues has not been established. No relief package for the tourism sector has been announced by the current government.

Third-quarter tourism employment has not been published. Whether the central bank changes its intervention approach is the open question, and it has signalled no change.

Frequently Asked Questions

Sources: Costa Rican Tourism Board, employment and arrivals statistics, El Financiero, the fall in air arrivals, La Nacion, the record exchange rate, Banco Central de Costa Rica, the July policy decision, La Nacion, the scale of currency intervention, INEC, the second-quarter employment survey, Tico Times, the sector’s account of the strong colon, Wikipedia, tourism in Costa Rica, Wikipedia, economy of Costa Rica, Wikipedia, Laura Fernández Delgado