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The currencies of the main Latin American exporters, Chile and Colombia, reached historical lows due to the fall in the prices of raw materials and the rebound of the dollar.
Various factors. The dollar continues its ascent against Latin American currencies seeing record highs in the face of general fears of a global recession and falling commodity prices.
Investors brace for lower global demand for metals after several Chinese cities adopted new restrictions to control Covid-19 outbreaks. In Colombia, the maximum at which the peso was traded was 4,580 pesos per dollar, only 20 pesos of the 4,600 pesos.
The dollar has strengthened 15% in the last two months against the Colombian currency, an increase that has its roots in the international context and some internal uncertainty about the economic program of the newly elected first president of the left, Gustavo Petro.
“Internationally, all currencies are devaluing against the dollar. The euro, the yen, the Latin American currencies and it occurs due to the risks of a world recession and due to the rise in interest rates in the United States”, explained Andrés Moreno, economist and stock market analyst.
Changes in Colombia in economic matters
In Colombia, the US currency began to rise sharply on June 21, the day the markets opened after the second round of the presidential elections, in which the winner was Petro.
“Falling oil, lower economic expectations weaken the Colombian currency. Also locally there is tension because of what is happening with politics, there is a change that is coming. We find international funds that still do not want to enter Colombia and Colombians taking their money out of the country. It’s a combination of factors,” he said.
“The Latin world benefited at the beginning of the year from the rapid rises in rates and the prices of raw materials… (But) the high inflation that we have seen is now going to result in much lower growth than we have become accustomed to.” said Christian Lawrence, senior cross-asset strategist at Rabobank.
According to the central bank, the devaluation of the Colombian peso so far this year is 7%, while in the last twelve months the currency has lost 15% of its value. In fact, at a global level it is the second most devalued currency, only followed by the Russian ruble, while at the level of Latin America it occupies the third position of depreciation.
With Reuters and EFE
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