:quality(85)//cloudfront-us-east-1.images.arcpublishing.com/infobae/IRE2PYQNDGCNC6WWL73HF4AIGE.jpg "The dollar in Colombia closes at ,814.08 after a slight rise from .94")
The price of dollar closed on February 28 at an average of $4,814.08, after a slight rise of $5.94 from the Market representative rate (TRM)which today stood at $4,808.14
The dollar started the week with a drop of $41.51 despite the uncertainty due to Gustavo Petro’s reforms
The Colombian peso was the currency that appreciated the most against the dollar in the world between February 20 and 24
On that day, the US currency had an opening price of $4,797, while it had a record high of $4,870 and a low of $4,762.50. According to the Set-FX platform, on February 28, more than $1,247 million was exchanged in 2,601 transactions.
Dollar volatility will continue due to domestic and international factors, including economic policy messages from the Government of Gustavo Petrothe invasion of Ukraine by Russia, the rise in interest rates of the United States Federal Reserve (Fed)as well as the rise in interest rates Bank of the Republic of Colombiaand the warning issued by the world Bank of the economic recession and the announcement of the economic slowdown.
The dollar closes at $4,924.77 in a lower session despite the uptrend
Price moderation and expectations of Fed moves in the U.S. will be key to the dynamics of the dollar
In Colombia, the internal context becomes relevant, in the midst of a heated debate on the tax expenditures necessary to carry out health reform, leading to a disintegrated discourse of the national government with the transfer of the position of ministers Alejandro Gaviria, Maria Isabel Urrutia and Patricia Ariza.
According to analysts, the perception of political and economic risk begins to increase in this direction.
At the same time, an analysis of Corfi-Colombian indicated that the Colombian peso accumulate a depreciation of 23.4% and is one of the latin american coins which lost the most value against the US currency.
The dollar in Colombia should be above $3,500 according to former finance minister Mauricio Cárdenas, but it is close to $5,000: what happened?
The former Minister of Finance presented some projections on the value that the American currency should have in the country. He assured that the devaluation has nothing to do with the arrival of the left in power
The entity pointed out that since mid-2022 the price of the dollar in Colombia has separated from the regional behavior and in the last month the difference has widened further, since the dollar/Colombian peso exchange rate has increased by 7.3% since December 24, 2023. more than in Brazil, Chile, Mexico and Peru.
“The depreciation of the Colombian peso over the past month is partly due to international factors, in particular the adjustment of market expectations regarding upcoming monetary policy decisions in the United States. In February, the Treasury bill market American began to integrate a more restrictive monetary position on the part of the Federal Reserve (Fed) in the coming months, that is to say a higher interest rate for a longer period”, explained Corficolombiana .
In this way, he added, the optimism the markets experienced between November and January, which led to a 10.4% drop in the dollar index and contributed to a 3.9% increase in this index during the month of February.
Regarding the weakness of the Colombian peso, he noted that it also responds to idiosyncratic factorssuch as vulnerability to external shocks due to the country’s large twin deficits and the uncertainty about the macroeconomic impact of the reforms which will be discussed in the Congress of the Republic.
This was confirmed by the fact that the Colombian peso has been separated in the last eight months from other currencies in the Latin Americain a favorable context for the region due to high commodity prices after a year of conflict in Ukraine.
“Indeed, the Colombian peso is accumulating a 23.4% depreciation against the dollar over the past year, while the Brazilian real, the Chilean peso and the Peruvian sol have depreciated by less than 2%, and the Mexican peso has actually appreciated by more than 10%”, said the financial institution.
Given this, Corficolombiana analysts expect the dollar to remain between $4,700 and $5,200 in the first half, under pressure from the Fed’s aggressive monetary policy in the United States and the risks linked to the reforms in Colombia, especially retirement.
Thus, the Fed meeting in mid-March would confirm that the aggressive monetary policy In the coming months. A potential change in Fed rhetoric would hardly come until June, keeping the dollar strong until then.
Corficolombiana concluded by saying that in Colombia the legislative program of the first half of the year will be cluttered with reforms, in particular pensions, which are likely to affect macroeconomic stability from the country.