One of the reasons is fears of a global recession and especially in the United States.
The dollar in Colombia continues to rise and reached a new record when trading above 4,280 pesos during the day, the highest price in its history, driven by the global context in which a possible recession in the United States is feared and the oil price, according to analysts.
The US currency closed operations at an average of 4,259 pesos, exceeding the previous highest representative market exchange rate (TRM) in history of 4,198 pesos, which was in force since last Friday and had not been reached since the peak of March of 2020 during the pandemic.
On the same day, the currency also broke records in Chile, reaching over 950 pesos.
The uncertainty generated by the possibility of a recession in the world economy, especially that of the United States, modifies bilateral exchange rates and currencies such as the Colombian peso are devaluing against the dollar, assured Isidro Hernández, research professor at the Faculty of Economics from the Externado University.
“In the Colombian case, it affects the fact that the export basket is fundamentally of raw materials and the world market has a recessive trend,” he told The Associated Press.
The fall in the price of oil is also affecting the price of the dollar in Colombia, given that 40% of the country’s exports depend on oil and its derivatives.
Shares in state oil company Ecopetrol also fell on Tuesday.
“Lower expectations of the international price of oil imply a movement in terms of Ecopetrol’s financial results that affect the stock market price of 10% of the shares, because the remaining 90% belong to the Colombian State,” Hernández said.
In addition, official statistics on Tuesday revealed an upward trend in inflation. For the month of June, annual inflation stood at 9.67%, returning to levels seen only in the year 2000, pushed by the prices of food and home public services.
Compared to 2021, inflation rose six percentage points, given that at that time it was 3.63%. To try to contain rising inflation, the Bank of the Republic raised the interest rate on Friday from 6% to 7.5%, the highest in the country’s recent history.
Colombia is moving towards its first leftist government with President-elect Gustavo Petro, who will soon take office on August 7. With the recent announcement of his Finance Minister, José Antonio Ocampo, he tried to reassure the markets and the unions, which received the appointment with optimism for his experience in macroeconomic and monetary policy.
However, there is still expectation in the country for the reforms that Petro will promote and the future of the hydrocarbon sector, on which state finances depend so much, given its proposal not to grant new oil exploration licenses and accelerate the energy transition.
In Chile
The price of the dollar does not stop marking historic highs in Chile, reaching above 950 pesos on Tuesday, driven by the global strengthening of the US currency.
The Chilean peso exceeded 953 pesos and closed at 951. On Friday the value of the US currency was 930 pesos and on Monday it was 928.
The main causes of the higher price of the dollar in Chile are fears of a world recession, the fall in the value of copper, the main export of this country, and the rate hike ordered by the United States Federal Reserve, analysts agree.
Local experts point out that another factor that influences the dollar’s rise is the plebiscite that Chile will experience on September 4, when Chileans will decide whether to maintain their current Constitution or have a new one that would lead to great changes in the South American country, which generates varying degrees of uncertainty, especially in investors.
Among those favored by the new rise in the US currency are the pension funds that have investments abroad, although they have not yet recovered the losses of 2021.
The increase in the dollar has an impact on Chilean inflation, which has accumulated 11.5% in twelve months, and local specialists estimate that it will exceed 12% when the rise in the cost of living in June is added, which will be known on next Friday. So far this year, inflation reaches 6.1%.
Chile imports 2/3 of the products that make up the basket of items with which monthly inflation is calculated. In addition, it buys almost all the oil it consumes.
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