For Colombians who are thinking of buying dollars, whether to travel or invest, it is time to do it, and you have to hurry, because the currency will enter a period of strong volatility in the coming weeks.
The drop in the dollar at the beginning of the day on Tuesday has been, by 70 percent, the product of the results of the elections on Sunday, where the letters that will go to the second round were changed and Rodolfo Hernández entered the arena, to compete with Gustavo Petro.
However, not everything has to do with the local fact. It also plays into the oil situation that has been soaring on this day, breaking the levels of 120 dollars per barrel.
The points of view about what is happening and what is to come are different, since there remains the uncertainty of what will happen in the country in the 18 days remaining for the second round elections. In all this time, the dollar will enter a waves, with high volatility, depending on various circumstances, both local and external.
Andrés Moreno, a market analyst, for example, says that key decisions are coming in June, such as that of the Federal Reserve with interest rates in the United States, as well as those in Colombia, which could also hit the price of the dollar, depending on the measures applied by the central banks to contain runaway inflation.
Juan Pablo Espinosa, an expert in Bancolombia’s economic research area, maintains that, althoughhe electoral result had an impact and we are seeing it in the exchange rate and in the value of the shares of companies, both those that trade locally and those at the international level, the oil issue will be key in the behavior of the dollar in the coming weeks.
“Oil is a determining asset of the Colombian export sector. Many investors take a directional position in emerging markets in crude, over Colombia, so it is difficult to know for sure how much of that recovery in the peso is attributable to one or another factor, but the truth is that they have happened almost simultaneously , and implies that for Colombia it is being a favorable situation in terms of its assets”.
Regarding the durability of this moment, Espinosa points out that: “We have a period of high electoral uncertainty in the next two weeks and the price of the dollar will also depend on what happens in international markets where the situation of risk aversion continues to be high.. It is hard to anticipate that this currency strength will continue going forward.”
Felipe Campos, an analyst at Alianza Valores, for his part, says that the strength of the peso against the dollar (that is, the price of the currency falling) would not be so temporary. “The volatility of this Tuesday is clearly electoral, but the strength of raw materials indicates that the tendency of the Colombian peso is to be stronger than the other currencies in the rest of the world.”
José Ignacio López, director of investigations at Corficolombiana, meanwhile, is blunt in saying that “a pro-market president contributes to the fall in the price of the dollar. “The stability will depend on how much nervousness the events of the next two weeks cause, in which anything can happen.”
Time to buy dollars
In the movement of the dollar there are two players, the one who sells and the one who buys. According to Andrés Moreno’s explanations, when people want to leave Colombia and take their capital elsewhere, the dollar rises; while when the price drops it is a sign of confidence in the country.
In fact, some analysts had estimated that a government that changes the rules of the game a lot in terms of taxes and legal certainty for investments in the country, would charge a ‘premium’ to the currency, between 100 and 150 pesos, that is, the price of the dollar would rise in that proportion, without counting what international events add to it.
Steep drop in the dollar
And on this Wednesday, on the contrary, the US currency lost 134 pesos against the Colombian peso, since, at the close of the market, the average price was 3,777.58 pesos, compared to the TRM (Representative Market Rate) for this day: 3912 pesos.
And not to mention the volume. On this day, a volume higher than the daily average, which is 1,242 million dollars, has been negotiated.
Will it last long below $3,800?
Many analysts say that a dollar below 3,800 pesos is good to buy. So those citizens who are thinking about going on vacation and are waiting for a dollar that doesn’t break their pockets so much have the opportunity to take advantage of the situation, around which analysts don’t risk saying how long it will last, because it is subject to what happens in the following weeks in the political arena and in the international variables that are on the horizon.
At the moment, on this Tuesday, the currency started losing 140 pesos against the Colombian peso and then rose again, but in total, during the day it decreased 134 pesos compared to the price of the previous day. However, if it was negotiated and closed below those 3,800 pesos, by Wednesday it could be on that path, taking into account that at the close of the market it remained at those levels that are tolerable for those who need the US currency.
Buying to hope that it will rise later is another of the reasons for the high negotiation of the currency that is taking place on this day, in which, in addition, the shares in the Colombian Stock Exchange have had a visible appreciation, which is also due to to rebalancing on the stock market.