In the dollar market there is an ‘overreaction’: Minister Ocampo

The ghost of the $5,000 appeared yesterday in the dollar market in Colombia, because in intraday operations the currency reached $4,921although the Representative Market Rate for today closed at $4,885.50, another new historical record for the currency.

The dollar closed interbank operations at $4,904the highest closing data in history, which represented an increase of $64 compared to the previous close.
According to exchange information systems, the minimum price of the dollar was $4,840 and the maximum reached $4,921.

(Read: The most powerful currencies in the world… and the dollar does not lead).

The average price of the currency was $4,885data that picks up $70 against the TRM.
With the TRM of $4,885.50 in force for this Friday, the devaluation of the peso against the dollar this year reaches 22.71%, while the indicator in recent months is 29.50%.

Yesterday the Minister of Finance, José Antonio Ocampo, said in the framework of the Great Forum: Tax reform in the final stretch, organized by El Tiempo, Portafolio and Probogotá that “obviously the Ministry of Finance is concerned, but I think there has been an overreaction of the markets”.

“I want to be very emphatic, as I have been every day, that the Government has a commitment to macroeconomic stability and, therefore, I would say that among the issues that have been the subject of much debate, there will be no exchange control . In addition, that is the responsibility of the Banco de la República“, assured the head of the Treasury portfolio, who also added that “the Government will guarantee compliance with the fiscal rule.”
For his part, President Gustavo Petro assured that the current contracts for gas and oil exploration are maintained.

For financial analyst Diego Rodríguez, the market is under pressure to the upside and is also decoupled from the region’s currencies And to the situation we must add that in the TES market “the loss of value there is very large”.

(See: Dollar at $5,000? The outlook for Colombia with the currency at that price).

For his part, Arnoldo Casas, Director of Investments for Asset Management at Credicorp Capital, says that pressures continue from outside because as long as there are possibilities of more rises in interest rates that put strong pressure on the dollar globally.

“At the internal level, these international forces are also joined by the government’s repeated speeches and comments that do not contribute to the psychology of the market and favor the demand for dollars, and it must be taken into account that there is a strong movement in the TES curve and that has been motivated by the discussions of the tax reform and the Budget”, Casas assured.

He adds that a higher TES placement expectation in 2023 And if we add to this that “the appetite of investors can be undermined after the comments, things get complicated.”

For his part, Diego Gómez, Corficolombiana’s foreign exchange market specialist, comments that the market is still waiting for a stronger message from the government on key issues such as energy policy.

(Keep reading: For analysts, internal factor is the cause of the rise of the dollar).

I emphasize that President Gustavo Petro assured that current exploration and exploitation will be respected, but new exploration is still in limbo and “as long as there is no clarity on local issues, we will continue to have one of the most depreciated currencies in the world.”

BRIEFCASE