The Colombian peso loses traction in front of the US dollarspinning three consecutive days down.
He USD/COP marked a daily minimum at 4,167.35, finding buyers who brought parity to a maximum not seen since February 3 at 4,206.85.
At the moment, the USD/COP rises 0.33% in the dayoperating at 4,185,13.
The Colombian weight reaches a minimum of almost two months after US economic data.
- The underlying pricing index of the United States personal consumption presented an increase to 2.8% in February exceeding 2.7% estimated by analysts and registered in January.
- On the other hand, the consumer’s feeling index of the University of Michigan was 57 points in March, worsening the estimates and the previous figure of 57.9 points.
- At the same time, the president of the San Francisco Federal Reserve, Mary Daly, said in her speech today that in two interest rates remain a reasonable projection by 2025, highlighting that economic growth and the labor market remain solid.
- In this context, the Colombian peso sinks at least two months, while the USD/COP rebounds 0.33% on Friday, visiting maximums not seen since February 3 at 4,206.85.
- The focus of investors will be on Monday about the interest rate decision of the Central Bank of Colombia, the consensus projects a cut of 25 basic points from 9.50% to 9.25%.
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 wallet values ​​that overcome 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.
