The fall of the dollar: the reasons behind the new respite for the Colombian peso TuBarco News
Why did the dollar fall again in Colombia?
Colombia News.
During the last few days, the dollar has shown a downward trend against the Colombian peso, moving around 3,700 pesos per unit. Although the exchange rate always responds to many factors, this recent drop combines international conditions and internal elements that have temporarily strengthened the Colombian peso.
A weakened dollar globally
The behavior of the dollar in Colombia cannot be separated from the international panorama. According to recent reports from Reuters, the US dollar has lost ground against several world currencies due to expectations that the Federal Reserve will reduce interest rates in the coming months. For the analysts consulted by that agency, this perspective weakens the attractiveness of the dollar as a safe asset and makes investors look for returns in emerging markets.
This global movement has also boosted the Colombian peso. Several economists cited by the international press agree that the lower strength of the dollar has opened space for emerging currencies, such as the peso, to show temporary appreciations.
Increased risk appetite in emerging markets
In addition to the weakness of the dollar, an increase in risk appetite has been observed globally. An analysis released by Reuters on emerging market debt indicates that investors are returning to these countries due to better rates and return expectations. This influx of capital increases the supply of dollars in economies such as Colombia, putting downward pressure on the price.
Local factors that drive weight
Domestically, the Colombian peso has benefited from signs of macroeconomic stability. Financial consultancies such as OCH Group, which closely follow the behavior of the peso, have explained that the combination of lower inflation, a stable fiscal environment and relatively attractive interest rates make Colombia more attractive for foreign capital.
Furthermore, according to technical explanations disseminated by local economists and analysts reviewed by media such as Vantage Markets, the difference in rates between the United States and Colombia maintains interest in assets denominated in pesos, which sustains the demand for the local currency and favors its appreciation.
The role of oil and the supply of dollars
Although the price of oil has not been the central driver of this recent decline, it is still an important factor for Colombia. When it remains stable or with an upward trend, the markets interpret that future income in dollars for the country will not be at risk. This generates confidence among investors and helps the peso remain strong.
Additionally, the greater inflow of dollars from investment and exports increases the supply of foreign currency in the market, which also puts downward pressure on the exchange rate. This point has been reiterated in academic analyzes by the Bank of the Republic and by economists from the National University.
What does this fall mean for Colombians?
The devaluation of the dollar can bring relief in the short term: it reduces the cost of imports, lowers the pressure on inflation and makes some goods and services more accessible for companies and consumers.
However, it also affects export sectors, which receive fewer pesos for each dollar earned, and can reduce the competitiveness of Colombian products abroad.
A behavior that could change
Although the dollar has fallen in recent days, specialists cited by Reuters warn that this trend remains fragile. International volatility, decisions by the Federal Reserve, any geopolitical tension or changes in the price of oil can quickly reverse the situation. For this reason, analysts insist that this level should not be assumed permanent.
The entrance The fall of the dollar: the reasons behind the new respite for the Colombian peso was first published in TuBarco News.
