Dollar in Colombia: currency behavior in the week and its projections

The week covering the last days of January and the first days of February 2024 was important for the direction of the dollar in Colombia. The price fluctuated between $3,890 and $4,050.

On Monday, the currency closed at a price of $3,931. While on Tuesday it fell slightly to $3,925.55 and the trend continued on Wednesday and Thursday with closing prices of $3,911.6 and $3,888 (lowest price) respectively. Ultimately, the price recovered on Friday and reached the highest point, $3,935.75.

Whereas the representative market rate (TRM) for February 3, 4 and 5 was $3,928.11.

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💵 Factors affecting the dollar

Local events and events in the United States cause fluctuations in the value of the dollar. Among the most relevant factors for the fate of the currency were the United States Federal Reserve (FED) meetings on Tuesday, January 30 and Wednesday, January 31.

The Central Bank of the United States unanimously decided to keep interest rates between 5.25% and 5.5%, thus completing four consecutive pauses.

Although the economy of the United States is developing positively as before (inflation and the labor market closed in 2023 with unpredictable consequences), there will be a cut this year, although not at the next meeting, Fed Chairman Jerome Powell detailed. Gave.

The Bank of the Republic did the same this Wednesday and decided to reduce interest rates by 0.25%. According to experts, fluctuations in interest rates have a close relationship with the dollar, because the lower the rate in the United States, the more attractive other economies become.

On the other hand, it was known that according to the National Administrative Statistics Department (DANE), the unemployment figure for 2023 was 10.2%. And related data from the United States also came out.

The country created 353,000 jobs last month, nearly double the 175,000 new jobs analysts had expected. The Labor Department reported that the unemployment rate remains at 3.7%.

💵Dollar Estimate

According to the latest Federative Financial Opinion Survey, expectations for the dollar exchange rate indicate the currency will end the month between $3,919 and $3,980. The price remained in a tight range till the end of the week.

“What could mainly impact the dollar is the adjustment in bonds (investment instruments in public debt). They have lost ground in the United States, as the market is no longer very optimistic about the Fed cutting interest rates in the short term. This has created a rebalancing of portfolios and this is a change that, for me, affects the market and the dollar,” explains Diego Franco, head of investments at Franco Capital Asset Management.

On the other hand, estimates for the end of 2024 are divided. The most optimistic is the Banco de la República, which set the TRM between $3,839 and $3,939 during the year.

Fedesarolo analysts, for their part, have a moderate estimate that predicts a TRM of $4,025 for December 2024.

Finally, last Thursday the government’s fiscal plan for 2024 was released. In this, the Finance Ministry sees relative stability in relation to the exchange rate against the dollar. The portfolio estimates that the year will close at a value of approximately $4,317 per dollar, which is the least optimistic estimate.

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