The facts that will continue to influence the price of the dollar

Inflation, which seemed to be slowing down, as well as the weakness of the dollar, could worsen after the decision of the Organization of the Petroleum Exporting Countries (Opec) plus Russia, which decided to cut production by 1.6 million barrels.

Yesterday again in Colombia, and in most countries, the US currency registered falls in its price, while the prices of the two main crude oil references showed increasesbut not at the same level as Monday.

(Read: The ‘blows’ that oil is giving to the price of the dollar).

In the Colombian banking market yesterday the dollar had a minimum price of $4,577.79, a maximum of $4,601.95 and an average of $4,587.16with operations for US$992 million.

The Representative Market Rate (official dollar) today is $4,587.31, that is, it fell $15.69 and the revaluation reaches 4.64%.

The price of the barrel of Brent oil ended on the London futures market at US$84.94while the price of Texas Intermediate Crude (WTI) rose to US$80.71 a barrel, stabilizing after the sharp rise caused by the cut decreed over the weekend and which will go from May to December.

For Diego Rodríguez, Managing Director of Bosk Capital, the OPEC cut, whichIn addition to the 2 million barrels in October last year, lhe decision not to increase strategic energy reserves by the United States, as planned once the dollar fell and inflationary pressures, put pressure on the dollar.

(See: The reasons for the recent fall in the price of the dollar in the country).

In addition, says the analyst, there is already talk of a possible rise in Brent oil towards US$95 – US$100 again, which generates inflationary pressures.

Dollars and pesos.

iStock

But also, it indicates that the blow may be harder for Europe and England, therefore and after data weak manufacturing in the United States, The global dollar measured by the DXY index (basket of six major currencies against the dollar) has been affected further downwards.

One consideration to keep in mind is that if the US jobs data on Friday comes out low, it is quite possible that the DXY index continues to fall and generates downward pressure on the currencies in Latin Americasays Rodriguez.

For her part, Ana Vera, chief economist of In On Capital of Panama, assures that there can be two contrasts, in the short term.

(In addition: The dollar, without a floor in Colombia: it is already trading for less than $4,590).

“The higher price of oil puts upward pressure on prices that had been falling and could bring bad times for currencies in general, as it would force a stronger stance from large central banks and could reduce appetite for assets in emerging countries such as Colombia. at the moment, but on the other hand, higher oil prices imply more dollars for the economy, which can strengthen the Colombian currency“, says.

The economist considers that it is necessary to wait for the announcements to be made by the US and European governments, since they have mentioned that those who who want to make adjustments to take advantage of energy prices could be punished and this announcement must be evaluated by Opec+ because as long as the cost of living and inflation derived from fuel prices continue to be affected, the conflict can escalate.

Analyst Alejandro Martínez says that with Brent oil, the benchmark for Colombia, above US$80, that will maintain pressure on the price of gasoline, which increased by $400 in April.

Martínez indicates that the path of the dollar will depend on inflation in the US and it is important to remember that it had begun to give way and the Fed (central bank) had announced that there might not be any more increases. “If this central bank continues to raise interest rates in its next sessions, we may see a strengthening of the dollar again.”

Besides, “the price of oil may have an impact on inflation to the extent that there is a depreciation of the peso“, said.

Martínez adds that in a scenario where the Fed does not raise rates, high fuel prices could be seen, offset by a lower exchange rate. “In this sense, there would be no major impact on local inflation,” he concluded.

So far this year, most emerging market currencies have strengthened against the dollar, led by the Mexican peso, the Hungarian forint and the Colombian peso.

BRIEFCASE