How much will the dollar reach in Colombia at the end of the year? This is what experts say

This Wednesday, October 30, The US dollar in Colombia rose strongly and surpassed the barrier of 4,400 pesosafter new data on the United States economy were known.

It is worth mentioning that The largest economy in the world grew at an annual rate of 2.8% in the period from July to September, driven by consumption and public spendingtwo basis points less than in the second half of the year, according to the Department of Commerce.

(You can read: Dollar broke the $4,400 barrier upwards, after new data on the US economy).

This is also explained by the pace of reduction of interest rates by the Federal Reserve (FED) and its goal of a figure of 3%, as explained in an analysis Jackeline Piraján, economist at Scotiabank Colpatria.

“When a central bank has higher-than-expected interest rates, its currency tends to strengthen. In the case of the United States, this has led to a strengthening of the dollar. In addition, the proximity of the elections in the United States also generates nervousness in the markets, since it is anticipated that either of the two candidates could increase their debt needs, which in turn could raise interest rates. This also influences the strength of the dollar globally.“said the expert.

(You may be interested in: Regions shake themselves up and achieve moderate economic growth in the second quarter).

From Scotiabank Approximately 90% of the depreciation of the exchange rate in Colombia is attributed to this international trendand the remaining 5-10% is explained by volatility and uncertainty around fiscal policy discussions.

Piraján mentioned that “International investors are nervous and tend to be cautious when considering investments in countries with an uncertain environment. In October, the discussion on the budget and the new initiative to distribute resources to the regions has contributed to increasing unrest in the markets, which has increased volatility in Colombia“.

The best option to exchange or buy the North American currency.

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And he added: “It is essential to observe what happens after the elections, what initiatives prevail and how much of this increase in the dollar can be considered structural. At Scotiabank, we believe that an exchange rate oscillating between 4,100 and 4,200 pesos is compatible with the macroeconomic state of Colombia; However, current levels exceed this figure, which could reflect a situation of uncertainty that could be temporary.“.

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Scotiabank maintained its projection of an exchange rate of approximately 4,150 to 4,200 pesos by the end of this yearas well as for the average of the next one, without ruling out that volatility could be prolonged.

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