Interest rates rose in the United States

The dollar will not fall significantly for the remainder of 2022At least that is the first impression of experts when they look at the macroeconomic situation in the United States.

We have to put it in context: In the North American country, they are facing the highest cost of living in the last 40 years. Thus, the Federal Reserve (Fed), the counterpart of Banco de la República, It raises interest rates in order to slow the rate hike.

Jerome Powell, Chairman of the Monetary Authority. Yesterday it announced its third consecutive increase of 75 basis points to leave rates in the 3% and 3.25% range., largely in line with what markets around the world have expected. And while there’s little surprise to rattle investors, that’s not enough to deflect strength from the dollar’s price.

what would happen?

Increased interest rates by the Fed have an effect on other economies. This is considering that investors prefer to take their dollars to the US and this reduces the amount in circulation to negotiate with them in other countries, which is why gringo currency becomes more expensive.

Gregorio Gandini, a financial markets analyst, confirmed that this scenario has already been discounted in Colombia and this explains gathering That the coin was between June and July, the period in which it reached the historical price of $ 4,627, a record that is still in force.

The Fed still has two more meetings for 2022 and Jerome Powell has already warned that if the cost of living doesn’t deliver, there will be more increases. in prices. With that in mind, in Gandhini’s view, the first thing to expect is that the dollar remains strong in other countries.

For clarity, take a look at the DXY index, which measures the dollar against a basket of seven other currencies, including the euro. When it rises, it reflects the appreciation of the US currency against other currencies.

This year, the DXY started at 96.21 units and as the months passed it jumped because the market was already waiting for the Fed to raise its rates. Yesterday, for example, this indicator jumped from 110.17 to 111.39 units.

In Colombia, according to Gandini, It is very likely that the dollar will last between $4,000 and $4,400, which is the range that has been observed in recent weeks. In other words, no significant decline is expected. In the view of analysts consulted by Banco de la República, the dollar could end up between $4,200 or $4,290.

This was explained by Alexánder Ríos, an analyst at InverxiaIt is estimated that US hourly rates will close in 2022 between 4% and 4.25%. “So, the door is open for the dollar to be more bullish than bearish. He noted that although analysts maintain the dollar perspective at $4,200 in a positive scenario, if US inflation does not subside, the possibility is open for it to end above $4,400 in the worst case scenario.

from your side. Andrés Pardo, chief Latin America strategist at XP Investments, noted that, the US rate hike “is clearly putting upward pressure on the dollar on Thursday, since the foreign exchange market closed yesterday at 1:00 pm, prior to the Fed’s decision.” Federal.

“however, There may be subsequent corrections. The decision of the Bank of the Republic of Colombia next week will be significantWhich if it manages to raise the interest rate by a similar amount to what it was at its last meeting, could contribute to a downward correction of the dollar, although I don’t think it would be very noticeable,” the expert added.


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