Bearish trend of the dollar in Colombia could be affected by the reforms of Gustavo Petro’s Government

The North American currency had a maximum price of $4,026 and a minimum of $3,998 on the day of September 12 – credit Marcelo Sayáo

On September 12, the US dollar closed at $3,993.71 on average in Colombia. With this, it had a reduction of $4.03 compared to the Representative Market Rate (TRM), which stood at $3,997.74.

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According to the Set-FX platform, the currency had a maximum price of $4,026 and a minimum price of $3,998.

In relation to past days, two successive dates fell. The volatility figure was visibly lower than that accumulated in the last year, so that its price is showing fewer changes than usual in recent days.

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According to the Directorate of Economic, Sectoral and Market Research of Bancolombia, the fundamentals of the international and local macroeconomic context allow us to foresee a slight space for devaluation compared to the most recent exchange rate records.

“In a balance between an international context in which financial conditions would stabilize in the short term at restrictive levels and the geopolitical situation will remain fragile, together with the pressures that will affect the ability of inflation in Colombia to converge to the Bank’s goal. of the Republic, the perspective of moderate risks on the fiscal situation and the uncertainty that the news will continue to print regarding the reforms that are currently being processed by the Congress of the Republic would lead to dollar levels being observed towards the end of 2023 /weight between $4,250 and $4,350″, the entity explained.

In addition, Bancolombia indicated that estimates of the fair exchange rate suggest that, in the absence of considerable shocks in the macroeconomic fundamentals of the exchange rate, it should be around $3,890.

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Meanwhile, he specified that this result means that, by the end of this year, the price could correct an additional 4%.

In turn, a Bloomberg analysis shows that the markets are awaiting inflation data from the United States, to be released on September 13, and the movement of the European Central Bank’s interest rate, which will be defined on September 14.

Firetrail Investments Pty Ltd Head of Investment Strategy Anthony Doyle told Bloomberg that “if we see an inflation number potentially tighter than the 0.6% expected by economists or 0.2% underlying, I would expect to see the market bond market to potentially start pricing in another rate hike before the end of the year, potentially as early as November.”

Regarding the price of oil, the barrel of Brent, which serves as a reference for Colombia, was quoted at USD92.27 after strengthening 1.80%, while the barrel of West Texas Intermediate (WTI) was quoted at USD89.17 after earn 2.15%.

Like other currencies in the region, such as the Brazilian real or the Mexican peso, the Colombian currency has also been one of the most appreciated in emerging markets so far in 2023.

Only in the first half of the year has the Colombian peso achieved great appreciation, driven in part by the weakening of the dollar globally, as the greenback has been affected by global events such as Russia’s invasion of Ukraine and local economic decisions such as the measures that the Federal Reserve has implemented to address inflation.

Locally, the Colombian economy has benefited from the slow discussion that Congress has had on the reforms proposed by President Gustavo Petro.

The Colombian peso strengthened in the last year – credit Reuters

Becoming one of the most appreciated currencies in Latin America, the peso has reached $4,100 per dollar, which has meant a progress of 16%. Some specialists believe that there could be a rebound and it would reach $4,500 pesos.

The euro, the second reference currency in the international market, has also not been immune to the growth that the Colombian peso has registered in recent months, mainly due to the peso-dollar and dollar-euro relationship. The euro has been approaching parity with the dollar and has even become worth less than one dollar, a situation that has not been seen for 20 years.

The Colombian peso is the legal currency in Colombia, it is usually abbreviated as COP and its circulation is controlled by the Bank of the Republic of Colombia.

Currently, there are coins of $50, $100, $200, $500 and $1,000 in circulation, the latter having its first circulation between 1996 and 2002, however, it lost popularity because it was very easy to counterfeit.

The $500 and $1,000 coins are bimetallic, to improve their security and prevent them from being illegally replicated; Meanwhile, all the names have designs that allude to the biodiversity that exists in the country, among them the spectacled bear, the flag macaw, the glass frog, the loggerhead turtle, among others.

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