For Colombians who are thinking of buying dollars, whether for travel or investment, it’s time to do it, and you need to hurry, because The currency will enter a period of high volatility in the coming weeks.
The dollar’s decline at the beginning of Tuesday, by 70 percent, was the outcome of Sunday’s elections, Where the messages that will go to the second round were changed and Rodolfo Hernandez entered the ring to compete with Gustavo Petro.
However, not everything has to do with local truth. It also plays a role in the oil situation that has been bullish today, breaching $120 per barrel.
Views differ on what is happening and what is to come, as there is still doubt about what will happen in the country in the remaining 18 days to the second round of elections. In all this time, the dollar will enter the High volatility depending on different local and external conditions.
Andres Moreno, a market analyst, for example, says that major decisions are coming in June, such as the Federal Reserve’s decision with interest rates in the United States, as well as those in Colombia, which could also affect the price of the dollar depending on the actions taken by the banks Central to contain hyperinflation.
Juan Pablo Espinosa, an expert on economic research in Colombia, emphasizes this, though.The outcome of the elections had an impact and we see it in the exchange rate and the value of the shares of companies, whether those that trade locally or internationally, the issue of oil will be central to the behavior of the dollar in the coming weeks.
Oil is a defining asset of the Colombian export sector. Many investors are taking a directional position in emerging markets in crude oil, above Colombia, so it is difficult to know for sure how much of this recovery in the peso is attributable to one factor or another, but the fact is that they happened almost simultaneously, and it is implied that for Colombia is in a favorable position in terms of its origins.”
Regarding the durability of this moment, Espinosa notes that: “We have a period of high electoral uncertainty in the next couple of weeks and the price of the dollar will also depend on what happens in international markets as risk aversion continues to rise.. It is difficult to expect this currency strength to continue in the future.”
For his part, Philip Campos, an analyst at Alianza Valores, says that the peso’s strength against the dollar (i.e. the currency’s depreciation) will not be temporary. “Obviously, this Tuesday’s volatility is electoral, but the strength of raw materials suggests that the trend of the Colombian peso is to be stronger than other currencies in the rest of the world.”
Meanwhile, Jose Ignacio Lopez, Corficolombiana’s director of investigations, was blunt in saying that “the pro-market president is contributing to the dollar’s depreciation. “Stability will depend on how tense the events of the next two weeks cause, as anything can happen.”
It’s time to buy dollars
In the movement of the dollar, there are two players, one of whom sells and the other buys. According to the explanations of Andrés Moreno, when people want to leave Colombia and take their capital elsewhere, the dollar rises; Whereas when the price drops this is a sign of confidence in the country.
In fact, some analysts have estimated that the often game-changing government in terms of taxation and legal certainty for investments in the country, will impose a “premium” on the currency, between 100 and 150 pesos, meaning that the dollar price will rise by this percentage without calculating what international events add to it.
Sharp decline in the value of the dollar
On Wednesday, on the contrary, the US currency lost 134 pesos against the Colombian peso, with the average price at the market closing being 3777.58 pesos, compared to TRM (representative market rate) for the day: 3,912 pesos.
Not to mention the size. On this day the volume was negotiated above the daily average of $1.242 million.
Will it last long under $3800?
Many analysts say the dollar below 3800 pesos is a good buy. So those citizens who are thinking about going on vacation and waiting for a dollar that doesn’t break their pockets much have the opportunity to take advantage of the situation, which analysts do not risk saying how long it will take, because it is subject to what will happen in the following weeks on the political scene and the looming international changes.
At the moment, on Tuesday, the currency began to lose 140 pesos against the Colombian peso and then rose again, but in total, it fell during the day 134 pesos compared to the price of the previous day.. However, if it is negotiated and closes below 3800 pesos, it may be on that path by Wednesday, considering that at market close it remained at those levels that are tolerable for those who need the US currency.
Buying in the hope that it will rise later is another reason for the high currency negotiations taking place on this day, which, in addition, shares on the Colombian stock exchange experienced a significant rise, which is also due to the rebalancing of the stock market.