Dollar price reached lowest levels in recent months in Colombia, but returns to the upside

On Monday, April 4, the dollar reached a representative market rate, TRM, of 3,690 pesos; this means that during March the exchange rate fell by more than $130, this is attributed to national factors such as the increase in the interest rate by the Banco de la República, in order to contain inflation and international factors such as high oil prices and the conflict between Russia and Ukraine.

Currently, the representative market rate is trading on average at $3,723.79, which means a sharp increase of 33 pesos, compared to the behavior of recent days. The director of Economic Research at Banco de Bogotá, Camilo Pérez, has just spoken about these changes in the TRM, assures that the bank's macroeconomic outlook estimates that inflation will end the year at 6.4% and that the dollar will reach 3,800 pesos.

Some experts believe that oil prices should not affect the price of the dollar, but at the moment in Colombia, this is one of the main factors, in fact, 33% of total exports are fuel, this being one of the main means for the entry of dollars into the country.

The price of oil coupled with the conflict in Ukraine has increased energy costs. Since the end of February, the benchmark Brent crude oil, used to refer to the European market, stood above 100 dollars, this has led to different currencies in the region being revalued, for example, Brazil, Chile and Peru. In addition, sanctions imposed on Russia can “benefit” the country, because it allows it a higher income from the sale of fuels and hydrocarbons.

Some analysts believe that the electoral situation would also be a factor in this fall in currency prices, Ana Vera, chief economist at Inon Capital, told Portafolio: “Polls have shown that there is an opportunity for a candidate other than Gustavo Petro to win, that is causing some to make a profit with the high rates of public debt bonds, and that leads to significant capital inflows and that is having an impact on the exchange rate”

But Vera is not the only one who attributes the price of the dollar to the electoral environment, Andrés Langebaek, director of economic research at Grupo Bolívar, attributed the low price of the currency to the results of the most recent presidential voting intention poll: “there was widespread dissemination of the polls of recent days in the economic means. J.P.Morgam did a special on the subject, for example. I would say that is it, because in terms of oil prices we are not at US $130 levels,” he told Valora Analitik.

The behavior of the Colombian peso is very striking, considering that it was the most devalued currency in the world in 2021. This change in the outlook is explained in a report by Scotiabank Colpatria, starting with how the currency has been affected, for example, by the increase in commodities,

In addition, he estimates that during this year the price of the dollar will remain far from 4 thousand pesos,

Without a doubt, prices will continue to change constantly and special attention will have to be paid to the electoral movements that will be presented in the coming weeks, since, as noted above, the candidates' voting intentions, polls and proposals are having a direct impact on the TRM.

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