The rise of the dollar and the fall of the peso are among the issues that have been pursued the most in recent weeks Well, even though the Colombian currency was already declining, after the presidential elections on June 19, there was a recovery that seemed unstoppable with the dollar rising.
In light of this, Economist and Investment Director at Alianza Valores y Fiduciaria, Felipe Campos, analyzes The reasons for this economic phenomenon occurring not only in Colombia, but also in Chile, Which he says should only be measured as of June.
According to the data provided by Campos, Since June 17, Colombia and Chile have experienced significant depreciation of their local currencies, It is still far from Brazil which has the weakest currency in the region.
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In addition, the economist explains, at least, In Colombia, the dollar remained stable during the first and second presidential rounds. In which he emphasized that the analysis should be based on the movement of the dollar around the world, “combining the pre-election dormancy with the post-election reaction.”
The strength of the Colombian peso
On the other hand, Campos mentioned that Aside from measuring the period after the election results, it is often forgotten that the Colombian peso is still the “strong currency in the world.” in 2022.
In this regard, the expert emphasized that even taking into account the rise in the dollar, Colombia has “one of the most powerful currencies in the world”, Which explains the speed of sale and the difficulty of separating invoices.
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Looking at the full year, you can measure the full 4% political impact over Brazil plus what could be added in 2021, the year Colombia moved with the Chilean elections and also over Brazil.
Thus, Campos described the phenomenon as a “Mass sale of the most powerful region in the world in 2022”, Taking into account the distance with the war between Russia and Ukraine and the great potential of raw materials in the countries of the region, which is combined with political uncertainty that may persist in the event of a recession.
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Added to this is that Brazil has finished the epidemic, so Chile and Colombia are left, and it is also normal to see this alignment. Is speed a concern? Yes, is it something we have never seen? No, especially during recessions or crises in materials.
I don’t want to underestimate the devaluation or the political mission. But if we stop acting as if we haven’t gone through this (every 4 years). And the political risk is not 400 pesos but with non-orthodox (like Argentina) we separate ourselves from those lines, this is the task of the new government. pic.twitter.com/eG513U3x3O
– Felipe Campos (@FelipeCamposPC) July 9, 2022
How far can the dollar go?
“The weight has not gone down like others. Now we are adapting to the behavior of the region. However, the rise of the dollar has little to do with the elections, it has everything to do with the rise in the value of the dollar at the international level. He explained that this is the reason why it reached 1.01 against The euro is due to higher interest rates in the Bank of the United States. Andres Jimenez, co-founder of Freedomwhich agrees with Felipe Campos’ analysis.
Jimenez also believes that the dollar could reach the $4,600 or $4,700 ceiling, but then it could pull back. In this regard, he says: “Unlike other currencies, the eurozone has not raised interest rates, and this means that this rise in the price of the dollar is temporary, in emerging regions such as the lattam, while they are adjusting.”