Dollar in Colombia could return to its all-time highs because of the US.

Stock markets around the world remain between the fear and the expectation that currently threatens the confidence of investors due to a fundamental decision that will take place this week in the United States and that, although it is something imminent, has many thinking about the severity with which it will arrive.

This is the new increase in interest rates for the month of September that is announced by the Federal Reserve, an issue against which not even the dollar escapes uncertainty and threatens new hikes around the world, even taking this currency to new record highs in Colombia.

Although for now the official currency of the United States oscillates between 4,200 and 4,400 pesos, experts do not rule out that the announcement that comes from the Fed will fuel fears of a recession and the subsequent demand for this currency that, it is worth It is worth remembering, it is an active shelter for times of crisis.

According to the Colombian Stock Exchange, this currency opened on the market this Monday, September 19, with an initial value of 4,436 pesos and ten cents, just 26 cents above the Market Representative Rate set for today by the Financial Superintendence in 4,435.84, after the previous days of strong increases last week.

It should be remembered that last week, the price of the dollar soared 73 pesos with 95 cents this week, taking into account that last Monday, September 12, it closed at 4,361.25, after breaking the negative streak it had. According to analysts, these results are the product of the tense calm that reigns in the stock markets, where good news is urgently needed in terms of inflation, interest rates and exports.

For Juan Eduardo Nates, an analyst at Credicorp Capital, these days will be one of great expectation and fearwhile the FED’s decisions regarding interest rates are known, after inflation in the United States fell less than expected in August and fueled the specter of recession in that country.

“Very likely there will be a very aggressive rise and this has the markets with a pressured dollar, oil correcting downwards, with WTI falling more than 2% and investors who are now in risk aversion mode, which makes us reverse the trend we had before the inflation data”, said this expert.

For now, the historical maximum of the dollar in Colombia exceeds 4,600 pesos, a level reached in mid-May, when it was affected by the soaring inflation in the United States and the specter of recession in this country. Although after this it began to fall, it did not return to the 3,700 pesos it had before the rise.

What about the FED and interest rates?

The Federal Reserve of the United States (FED, central bank) is ready to decide this week a new and strong increase in its interest rates, determined to prevent the current high levels of inflation from consolidating and despite the threat of recession.

In August, prices increased more than expected in almost all items, from housing to food, going through zero kilometer cars, which ended up convincing the FED of the need to take action. The Fed’s monetary policy committee will begin deliberating on Tuesday and the next day it will announce its resolutions.

At 8.3% in one year, the rise in the inflation rate (CPI) has slowed slightly thanks to the fall in gasoline prices, but it is still too high.

The world’s largest economy is showing signs of a timid slowdown in demand, especially in the real estate sector or even in manufacturing. But “as expected, the Fed will raise rates by 75 basis points again,” says Nancy Vanden Houten of Oxford Economics.

The monetary entity already proceeded to a strong rise in June, the largest since 1994, and did so again the following month. In total, since March rates have increased four times. Currently, the reference rates are between 2.25 and 2.50%.

The FED is gradually raising them, in order to make credit more expensive for individuals and companies and thus slow down consumption and investment. Its European counterpart, the ECB, also dealt a blow to inflation in early September by raising its rates by 75 basis points, something unheard of since the creation of the euro.

*With information from AFP.

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