In three days, the price of the dollar fell more than 100 pesos and it returned to a minimum that was not seen for almost 13 months, but this devaluation is not unique in Colombia, but has been replicated in several countries around the world.
Last Friday, this currency traded, on average, at 4,089.12 pesos, a similar value was seen for the last time on June 29 of last year (the TRM was 4,089.72 pesos). Even, the closing price of the day was lower: 4,052.45 pesos.
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Investors were uncertain about a country that could have many structural changes
Ten days after the election of the President Gustavo Petro began an upward trend that led the dollar to a peak of 5,061 pesos on November 8, 2022, a price never seen before in the country.
However, both the international situation and that of the country is different from that of those days, which has led the Colombian peso to appreciate again. José Ignacio López, director of Economic Research at Corficolombiana, points out that one of the reasons that has moved the dollar down is that the Federal Reserve (Fed) of the United States you are reaching the limit of increasing your interest rates.
«Most likely it will increase 25 basis points and end the cycle of increases to then start a cycle of lowering rates,» he adds.
Meanwhile, Felipe Campos, Investment and Strategy Manager at Alianza Valores y Fiduciaria, assures that the dollar is falling faster in 2023 because last year «investors were uncertain about a country that could undergo many structural changes.»
As they have discounted that, the dollar has begun to recover what it did not have last year is already realigning with the world trend, and since it is lagging behind, it is doing so faster.
Despite the devaluation that has been seen in recent weeks, in the second half of the year The dollar may face a new rebound due to several aspectsexplains Juan David Ballén, director of analysis and strategy at Casa de Bolsa.
The first has to do with the Fed. He says that the market expects it to keep its interest rates stable, if it raises them, the currency could move higher.
The social reforms of the National Government will also influencel, especially the pension, which will be discussed again once the sessions of the Congress of the Republic are installed on July 20.
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People have realized that the country is much more resilient and strong
«In both cases, things are looking good for the moment. As inflation is falling in the united statesthe Fed has less pressure to raise rates, and at the internal level, the Government has lost governability, which generates the expectation that, if it decides to continue with the process of the reforms, it will have to moderate them”, assures Ballén.
The regional elections scheduled for the end of October they can also have an effect on the behavior of the US currency in the country, «if there is a breather for the government and a recovery of presidential approval,» says Felipe Campos.
However, he states that «people have realized that the country is much more resilient and strong and is within a huge regional appetite for these types of events to change the trend of the dollar».
As bullish behavior is seen again, a cheaper dollar is benefiting consumers because It is cheaper to travel to dollarized countries and buy imported items, such as appliances, technology, and vehicles, but it hurts exporters, as they start to receive fewer dollars from their sales.
(Also read: Dollar in Colombia started the week with an opening price of $4,154)
The fears that persist for an eventual economic recession in the United States
Once investors confirm that the social reforms did not eliminate the rules of the game in Colombia and all the noise that is developing is overcome, The dollar could be located between 3,500 and 3,400 pesosestimates the Alianza Valores expert.
While from Corficolombiana they estimate that by the end of the year the dollar will be around 4,200 pesos due to the fears that persist for a possible economic recession in the United States.
For his part, Ballén, from Casa de Bolsa, believes that if the probability of recession in usa is reduced and the reforms in the country are moderated, the dollar can close 2023 between 3,800 and 4,200 pesos.
«The fact that interest rates in the United States are not going to increase further reduces the upward pressure on the dollar globally,» he adds.
ECONOMY AND BUSINESS