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Price of the Dollar in Colombia today Tuesday, June 25: The Colombian Peso strengthens in a week marked by the interest rate decision

The US dollar continues to depreciate against the Colombian peso for the third consecutive day. He USD/COP started Tuesday around 4,094.45, subsequently falling to a twelve-day low at 4,062.20.

USD/COP is trading at 4,080.70 at the time of writing, losing 0.20% daily.

Colombian peso awaiting Colombia’s interest rate decision

  • The Colombian peso will be awaiting two relevant events this week. On the one hand, the Banco de la República de Colombia will publish its decision on interest rates on Friday, expecting a cut of 50 basis points to 11.25% from the current 11.75%. That same day, the country will reveal its unemployment rate for May, after it fell to 10.6% in April, its lowest level in four months.
  • The United States published several economic data this Tuesday with mixed results. On the one hand, the Chicago Fed’s national activity index has risen to 0.18 in May from -0.26, its best figure in ten months, while the Richmond Fed’s manufacturing index has fallen to -10 in June from 0 , its worst result in three months. Elsewhere, Conference Board (CB) consumer confidence has dropped to 100.4 in June from 101.3, although the current situation index has improved to 141.5 from 104.8.

economic indicator

Type of interest

The interest rate, published by the Bank of the Republic of Colombiais the main monetary policy intervention mechanism used by the Bank of the Republic to affect the amount of money circulating in the economy.

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Next post: Fri Jun 28, 2024 19:00

Frequency: Irregular

Dear: 11.25%

Previous: 11.75%

Fountain: Bank of the Republic of Colombia

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: to achieve price stability (control inflation) and to promote full employment. Its main tool for achieving these two goals is to adjust interest rates. When prices rise too quickly and inflation exceeds the Fed’s 2% target, the Fed raises rates, which helps 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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