This is how the dollar behaved in Colombia this Friday, June 23:
Closing of TES:
• The 2024 TES closed at 9.795%, while the previous closing was 9.781%.
• The 2026 TES closed at 9.865%, while the previous closing was 9.951%.
• The 2028 TES ended at 9.915%, while the previous figure had been 9.968%.
• The 2032 TES closed at 10.360%, and the previous day they had closed at 10.294%.
At the end of this week, the Colombian dollar experienced a correction in its downward trend and recorded a significant rebound. The currency closed $80 higher than the previous session, reaching $4,188 on Friday, compared to $4,108 before. Experts attribute this significant movement to the recent announcement by the National Government regarding a possible declaration of social economic emergency. Investors perceive this as a potential source of uncertainty since it would grant President Gustavo Petro the power to issue decrees with the force of law without congressional approval.
Furthermore, the higher value of the dollar in Colombia can also be attributed to the announcements made by Jerome Powell, the President of the Federal Reserve (FED), regarding possible interest rate increases in the United States. These announcements have had a global impact, leading to adjustments in the prices of major assets. As a result, US stock index futures have been in the red, losing close to 0.8%.
Alejandro Guerrero, a foreign exchange associate at Credicorp Capital, stated, “We have seen the prices of the main assets globally being affected by Powell’s confirmation of the possibility of further interest rate hikes during his recent intervention in Congress. This has contributed to the depreciation of the dollar and its impact on the Colombian market.”
The maximum value reached by the dollar in Colombia on June 23 was $4,218, while the minimum was $4,100. The average price was quoted at $4,171. Additionally, the prices of crude oil references experienced a decline throughout the day. WTI (West Texas Intermediate) was down 0.66% at $69.05, and Brent was down 0.59% at $73.70.
On Friday, June 23, the dollar in Colombia experienced a reversal in its downward trend and rebounded. The 2024 TES closed at 9.795%, higher than the previous closing rate of 9.781%.
What factors contributed to the increase in the 2024 TES closing rate despite the dollar’s rebound
There could be several factors that contributed to the increase in the 2024 TES (Treasury bond) closing rate despite the dollar’s rebound. Some possible factors include:
1. Economic Growth: If there was a robust economic growth in the country, investors might have been attracted to invest in Treasury bonds as a safe haven asset, leading to an increased demand and higher closing rates.
2. Inflation Expectations: If there were concerns about rising inflation, investors might have sought refuge in Treasury bonds as a hedge against inflation. This increased demand could have pushed up the closing rates.
3. Federal Reserve Policy: The Federal Reserve’s monetary policy actions, such as keeping interest rates low or buying Treasury bonds through quantitative easing, can influence the demand for Treasury bonds and affect their closing rates.
4. Market Sentiment: Overall market sentiment and investor confidence play a significant role in determining bond prices and closing rates. If investors had a positive outlook on the economy or if there was increased demand for government debt, it could have led to higher closing rates despite the dollar’s rebound.
5. Global Factors: Economic and political events in other countries can also impact the demand for US Treasury bonds. If global economic uncertainties increased, investors might have shifted their investments towards safer US Treasury bonds, driving up their closing rates.
It’s important to note that these are potential factors and the actual reasons for the increase in the 2024 TES closing rate would depend on the specific circumstances and economic conditions prevailing at that time.
How did the reversal in the dollar’s downward trend on June 23 impact the investment landscape in Colombia?
The reversal in the dollar’s downward trend on June 23 likely had various impacts on the investment landscape in Colombia. Here are a few potential effects:
1. Exchange rate: A reversal in the dollar’s downward trend means that the Colombian peso may have weakened against the dollar. This can make Colombian exports more competitive and attract foreign investment, as it becomes cheaper for foreign investors to purchase Colombian assets. On the other hand, it can make imported goods more expensive for Colombian consumers.
2. Public debt: If the Colombian government has foreign denominated debt, a weaker peso could increase the burden of servicing this debt, as more pesos are required to pay the same amount in foreign currency.
3. Stock market: A weaker peso can boost the value of companies that earn a significant portion of their revenue in foreign currencies. These companies may see an increase in their stock prices.
4. Inflation: A weaker peso can lead to higher inflation as it raises the cost of imported goods. This can impact the investment landscape by affecting interest rates, consumer spending, and business profitability.
5. Investment flows: The reversal in the dollar’s trend could alter the flow of investment into or out of Colombia. If the peso weakens, it may make foreign investors more cautious about investing in the country, especially if they have concerns about currency volatility.
It is important to note that the specific impact will depend on various factors such as the extent of the reversal, the overall economic conditions in Colombia, and global market dynamics.