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Price of the Dollar in Colombia today, Friday, June 14: The Colombian Peso depreciates and reaches levels not seen since the end of October

The price of the US dollar has reached levels not seen since October 26 against the Colombian peso. USD/COP began the day reaching a daily high of 4.185, finding sellers that took the pair to a daily low of 4.115.

Currently the USD/COP is trading at 4.141, registering a marginal loss of 0.04%.

Colombia publishes April retail sales

The National Administrative Department of Statistics (DANE) published the year-on-year retail sales data for the month of April, which stood at -1.6%, lower than the 1.6% expected by market consensus, thus registering its fourteenth consecutive decline. .

On the other hand, the University of Michigan Consumer Confidence Index recorded a decrease to 65.6 in June from 69.1 in May. This reading is lower than market expectations of 72. One-year inflation expectations remained stable at 3.3%, while the five-year inflation outlook rose from 3 to 3.1%.

The US Dollar FAQs

The United States 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 alongside local banknotes. According to 2022 data, it is the most traded currency in the world, with more than 88% of all global currency exchange operations, equivalent to an average of $6.6 trillion in daily transactions. After World War II, the USD took over from the pound sterling as the world’s reserve currency.

The single most important factor influencing the value of the US Dollar is monetary policy, which is determined by the Federal Reserve (Fed). The Fed has two mandates: achieve price stability (control inflation) and promote full employment. Your main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% target set by the Fed, the Fed raises rates, 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 enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit into a clogged financial system. This is an unconventional policy measure used when credit has dried up because banks do not lend to each other (for fear of counterparty default). It is a last resort when a simple lowering of interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis of 2008. It involves the Fed printing more dollars and using them to buy US government bonds, primarily from financial institutions. QE usually leads to a weakening of the US Dollar.

Quantitative tightening (QT) is the reverse process by which the Federal Reserve stops purchasing bonds from financial institutions and does not reinvest the principal of maturing portfolio securities in new purchases. It is usually positive for the US dollar.

Source: Fx Street

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