Dollar in Colombia: reasons why it rose above $4,600

the conjunction of some external and internal economic and political factors generated this Monday a strong pressure on the price of the dollar, which registered an increase of almost $84.

The Representative Market Rate (official dollar) for this Tuesday is $4,632.20, that is, $83.70 above the one in force this Monday ($4,548.50).

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The increase in interest rates in the United States on Wednesday and a day later in the European Union, as well as the political events in Colombia after the departure of the Vice Minister of Energy, Belizza Ruiz and presentation of proposals health and pension reforms they began to shake the atmosphere in the markets and analysts say that this could be the tone of the rest of the week.

This Monday, after opening in the banking market at $4,570, the currency closed at $4,655.05, which was the maximum rate of the exchange day, although the volume was US$936 million, the lowest amount in the last week.

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Apart from the news about the increase in rates in the United States and the European Union, there is concern about the tensions that are registered in Europe within the war that is taking place, after the invasion that Russia carried out on the Ukraine at the end of February of last year.

According to an analysis by Bancolombia, the evolution of inflation and the decisions of the Federal Reserve Bank (central bank) of the United States will be key in the dynamics of the evolution of the peso-dollar relationship in the coming months.

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The bank points out that if inflation shows signs of consistent convergence and this reduces the need for increases in federal funds interest rates, In addition to consolidating the prospect of rate cuts during the second half of this year, this would be consistent with a scenario of relative strength of the dollar in Colombia.

“This would allow us to maintain a vision of an exchange rate close to $4,700 towards the end of the year.”, says the entity.

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He also said that in the meantime, for the first quarter of this year “We expect an average exchange rate of around $4,750”.

assured that the market anticipates a 25 basis point adjustment by the Fed, supported by the lower economic dynamics.

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