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What happened with the rise Colombian Dollar This is related to mixed signals from financial markets. Especially as inflation falls ColombiaFuture interests USA and the repercussions of the presidential election Mexico.
this Represents market interest rate (official US dollar) today is 4107.52 dollars, up 84.26 dollars from Thursday, and the peso has depreciated 7.47% this year. It has risen 285.47 dollars this year.
(You can read: Colombian dollar has no ceiling and has exceeded 4100 pesos).
However, analysts say Colombia’s foreign exchange market has been working against other countries in the region.
Dollar
according to Édgar Jiménez, Professor of Finance and Finance Laboratory, Jorge Tadeo Lozano University“As markets calm down, the exchange rate could fall below $4,000 again.”.
(You can read: The impact of stagnant inflation on rate cuts).
The scholar believes that the price of the currency will go down slightly in the short term.Around $3,950, although the trend is upward in the long term and the decline in US inflation will lead to a decline in the coming monthsAnother seasonal effect, Although the magnitude is relatively limited, it is related to the impact of the rise in the US dollar during the holiday period..
Jackeline Piraján, Economist, Scotiabank Colpatriasaid what he saw was a negative reaction to the Mexican election 12 days ago.
“Since then, the Colombian exchange rate has depreciated by a little over 5%, and we have been operating from $3,850 to close to $4,000 and 4,100 pesos to the dollar. In addition, we would like to know the approach of the Medium-Term Fiscal Framework (MFMP)“, that he Ministry of Finance The economist said it will be published this Friday.
(You can read: Precautionary blocking of spending: What the government can and cannot do after this decision).
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Analysts also believe thatThis change may not have a significant impact on the decisions of Colombians who decide to travel abroad in the short term, since we assume that these plans were made a few weeks, maybe a few months ago, when our exchange rate was more stable, which is why the big expenses such as flights, accommodation and tourist plans could have been made with less money.”. Therefore, unforeseen expenses may be affected.
He assured that part of the dollar’s movement was structural, that is, it was expected that “Another sharp decline in the short term, as in addition to the Mexican elections, the publication of the MFMP is expected”.
(Apart from: Macron announces early French elections after European election defeat).
For Scotiabank Colpatria, the fair value of the exchange rate, from a macroeconomic perspective, It should be between $4,000 and $4,100 per dollar.
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And taking advantage of the depreciation of the US dollar in recent months, many companies have hedged their currencies and are likely not to feel the impact of the depreciation on prices in the short term. The benefits of coverage continue to show up when you want to avoid volatility.
Gabriela Bautista, External Background Analyst, CorficolombianaThe optimism towards Colombian assets in recent months has been shattered following the Mexican elections, he said. “Rather, the peso has incorporated the idiosyncratic risk of a deterioration in local macroeconomic fundamentals in a more transparent way, and risk premiums have reflected this.”
(Apart from: Unexpected shift in bank assets boosts bond market).
Especially on the edge of knowledge Medium-term fiscal frameworkMarkets appear to be reflecting a heightened risk aversion among foreign investors amid expectations that fiscal rules will not be followed this year.
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“We believe the $20 billion adjustment announced last week is not enough to ensure the sustainability of public finances.“, explain.
Different moments when issuers reduce interest rates
for Colombian flowerit is expected that carry trades (investing in local currency and generating foreign currency profits over time) will begin to decline, while Bank of the Republic Continue to lower interest rates (albeit cautiously).
inside Fed There is no confidence that interest rates will start to fall this year. Against the backdrop of fiscal risks and economic deterioration (in the form of lower tax revenues), the exchange rate seems to contain the depreciation wind announced since the beginning of 2024 and it may intensify.
Holman Rodriguez Martinez
Portfolio Reporter
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