Price of the dollar today January 22 in Colombia

The dollar continues to show a strong dependence on the decisions that the board of directors of the Federal Reserve (Fed) can make.

The dollar began its downward course on Monday, consolidating at $3,898. This translates into a drop of $14 compared to Friday’s close, thus recording a change of -0.35%.

The market representative rate (TRM) remains at $3,916.39.

The dollar continues to show a strong dependence on the decisions that the Federal Reserve (Fed) board will make regarding interest rates.

This is explained because to the extent that rates are lower, there will be more investment opportunities, i.e. more dollars circulating in countries like Colombia. Such a scenario would imply a cheaper currency.

In its last meeting, the Fed voted in favor of maintaining stable rates and should prepare the first reduction, in line with the decline in inflation in the United States since, it should be remembered, the increase in the cost of credit was the main strategy to counteract the increase in shortages.

“Although, overall, the exchange rate does not appear to have changed much, volatility has been high,” comments Jackeline Piraján, economist at Scotiabank Colpatria. In your opinion, this volatility can basically be attributed to international reasons.

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In the last week, these factors include the World Economic Forum meeting in Davos, where “statements were heard from central bankers seeking to temper expectations for a rapid cut in interest rates, both in the United States and in Europe and other developed countries”. says Piraján.

And he concludes that “S&P’s announcement generated a slight and short-lived impact on the exchange rate, which is why we affirm the idea that at this moment what matters most for the exchange rate continues to be the international component ”. Piraján is referring here to Colombia’s credit rating published this week by Standard & Poor’s, a decision in which it maintained the rating (BB+), but lowered the future outlook from stable to negative.

What factors will influence the dollar this week?

On the international component front, Diego Franco, Head of Investments at Franco Capital Asset Management, also sees an adjustment in the market compared to the Federal Reserve’s (Fed) interest rate expectations, a problem that is easing.

It is important to clarify that the next Fed meeting which will decide on interest rates will take place between 30 and 31 January, when a reduction in interest rates is not yet expected, because although inflation has eased, there there is still strength in the labor market, which could indicate that the Fed expects there is still room to keep the brakes on rates.

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Among the international factors, Juan David Ballén R, Director of Analysis and Strategy of Casa de Bolsa SCB, also sees the inflationary effects that “would generate the increase in maritime freight prices, due to the interruptions in the Suez Canal”, as well as drought in the Panama Canal.

These are two of the main pressures on global trade, which could push up the prices of all types of goods, giving oxygen to inflation and thus preventing a possible rate cut by the Fed.

Specifically, for the week, the data that the analysts consulted see as the biggest influence on the dollar in Colombia will be the fourth quarter GDP data from the United States.

Similarly, the first decisions by central banks on interest rates are also recorded on the international scene (Japan and Europe, for example). These determinations, added to the American GDP data, “are very important because they will confirm, or exclude, the possibility of rapid cuts in interest rates. For this reason, the other week we have to be very attentive to what is happening outside, to know what is happening with the exchange rate in Colombia.”

For Franco it is possible that, in this scenario, the dollar will reach $4,000 by the end of the week.

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2024-01-22 13:24:00
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