The Colombian peso recedes in front of the US dollarspinning five consecutive sessions down.
The USD/COP reacted upwards from a daily minimum at 4,335.10, where aggressive buyers attracted that promoted parity to maximums not seen since December 5 at 4,437.61.
At the moment, The USD/COP rebounds 1.02% on Tuesdayquoting when writing at 4,437.02.
The Colombian peso sinks at least four months amid the tariff negotiations
- The United States Comerio Representative Jamieson Greer confirmed tariff negotiations with 50 countrieshighlighting the openness to ideas to achieve reciprocal international trade.
- However, The US press secretary, Karoline Leavitt, announced the application of 104% tariffs on Chinaeffective as of Wednesday, April 9, after the imposition of 34% rates to American goods.
- After this news, the dollar index fell 0.42% today, quoting about 103.07, being held within the operational range of the previous session.
- In this scenario, The Colombian peso collapses to minimal not seen since December 5while the USD/COP rebounds 1.02% daily, operating about 4,437.02, signing its fifth consecutive day up.
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the values in portfolio that expire in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
