Dollar is traded in the futures market at $5,200: what it is and how it works

This Friday, October 14, 2022, the dollar in Colombia registered its highest price in history (4,636.83), after having touched $4,700 at some moments of the day.

(The dollar in Colombia closed the week with historical prices).

In addition to this, it marked its maximum intraday price ($4,707) and in the futures market it closed at $5,200, not a minor figure, since it suggests that the market expects a dollar close to that price.

The futures that are part of the financial derivatives are investment vehicles of economic agents in which purchase and sale contracts are agreed at a determined price with delivery in a future period of time, not only in the dollar but in other investments such as oil commodities and variable income businesses.

In other words, there are contracts that predict that the dollar will sell at $5,200.

(Dollar in Colombia: how much are they selling it for in exchange houses?).

“There are contracts in the futures market in Colombia that are trading at $5,200. About that what investors are doing is making acquisitions under those commitments”, says Jeisson Balaguera, executive director for Values ​​AAA.

According to the expert, if when the day on which the delivery was agreed arrives, the dollar exceeds that value, it will have a return. However, if on the contrary the price falls, the investor is going to have losses, since he would have bought the most expensive dollar at what is paid at that moment.

However, for Diego Camacho, senior economist at Credicorp Capital, it is not that the market is anticipating that the dollar will reach that price, but rather that it is the forward price of a six-month hedging operation, which due to its This position implicitly includes the interest rate differential between Colombia and the US.

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