The dollar in colombia keep going downhill the fall of 7 pesos registered yesterday is added to the four of the last days and leaves the representative rate of the market (MRT) effective for today Thursday at 4,538 pesos, some 272 pesos below the record at the beginning of the year (4,810.2 pesos) and a difference of more than 500 pesos compared to the more than 5,000 pesos reached just two months ago.
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A dollar above 4,538 pesos has not been seen for more than three months, exactly since September 30, when Colombia’s official exchange rate was above 4,532 pesos, according to statistics from the Bank of the Republic.
At the beginning of the third exchange day of this week, the US currency lost 38 pesos and reached a minimum of 4,504 pesos that same session, according to records of the Electronic Trading System (SET-FX) of the Colombian Stock Exchange. (BVC).
Colombia’s continued to be the «fashionable» currency in the region, with a revaluation of more than 7 percent so far this year«driven by oil prices and by the recovery, after the overreaction of the second semester due to political issues,» says a recent report by Banco de Bogotá.
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Even the possibility of no more oil contracts hasn’t stopped the dollar’s slide. According to Juan David Ballén, director of Analysis and Strategy at Casa de Bolsa, the news has not generated any impact because it was already discounted by the market. “Financial assets are not usually impacted twice by the same event. The dollar has fallen but it is still above the level it would be if there were no uncertainty around the energy transition in the country, ”he opined.
Added to the pressure of oil, as factors that play in favor of a fall in the dollar, is the expected course of the United States economy, as well as the increases in rates by the Bank of the Republic.
In addition to the effect on inflation that is sought with these increases, the higher Issuer rates close the gap with external rates, such as those of the Fed in the United States, and slow down the outflow of foreign currency. The price of a barrel of Brent oil, the main reference for Colombia, has risen more than 13 percent since last January 4 and until yesterday afternoon it was trading at around 86 dollars.
the same bogota bank report realizes that the dollar in the international market has remained downward, after knowing some economic data from the United States.
(Dollar traded this Monday at an average of $4,550.53, price of 4 months ago)
“The dollar index (DXY) remained under downward pressure, especially after the release of retail sales, industrial production and PPI in the US. These data surprised by their weakness and generated fear among investors, leading to the DXY to year lows at 101.52. The index has remained in a narrow range, favoring the demand for other currencies”, comment the analysts of the bank.
what’s coming
According to Rodrigo Cifuentes París, Head of Corporate Finance at BDO in Colombia, a good part of the volatility registered by the dollar is due to factors that have influenced the increase in the price of oil, which causes more to enter the country and, consequently, , the TRM goes down. The expert also points out that inflation has also influenced this behavior because to control it the Bank of the Republic has had to raise its rate, today at 12 percent.
The central bank rate It can influence the magnitude of the exit or entry of dollars into the country, depending on the difference in the profitability of maintaining the divisions in the country or taking them to other markets and assets that generate greater profitability. “There is –says Cifuentes– an exit and/or entrance, a measure in which the rate and inflation vary”. With the increases in the Issuer’s rate, the difference in returns with the exterior has decreased.
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Other aspects that must be taken into account in this performance of the currency is that the country is tied to the evolution of the interest rate of the United States, which means that -possibly- there is an outflow of dollars, as has happened in recent months.
The outlook for the economy also has an influence, as well as the conflict between Russia and Ukraine, which generates instability in the world economy, especially due to the shortage of energy.
Cifuentes cautions that it is not certain how much longer this behavior can continue. But it indicates that there are economic and political factors that intervene and are unstable and, without a doubt, the reforms (pension, labor and health) or changes that occur internally generate uncertainty.
“It must be taken into account that messages of economic recovery are being given these weeks, a control of inflation in the US, as well as the reopening of China, which generates a prospect of reactivation, and that implies a possible increase in oil –which in Colombia is reflected in the entry of a greater amount of dollars–. In this period, the price of the dollar tends to fall”, affirms the expert.
Given this scenario, he says, it is necessary for businessmen with operations abroad to protect themselves through coverage policies. “There are financial instruments or negotiation methodologies that allow setting a TRM for the purchase or sale of dollars,” he pointed out.
