He The US dollar has soared to new 17-month highs this Wednesday against the Colombian Peso at 4,456.15after having tested an intraday low at 4,415.99.
The USD/COP is trading at 4,432.08 at the time of writing, gaining 0.34% so far this day.
The Colombian peso suffers with Trump’s victory in the United States elections
- The Colombian Peso has fallen today to its lowest price since May 31, 2023. On that date, the USD/COP reached a high of 4,463.51.
- The Republicans have won the US elections held yesterday, Tuesday, reaching a total of 277 electoral votes compared to the 224 achieved by the Democrats.
- Donald Trump has appeared before the media, predicting a golden era for the United States and pointing out that he is going to seal the country’s borders and will only allow immigrants to enter legally.
- The Colombian economy could suffer from an increase in tariffs on Colombian products, although it has yet to be determined how restrictive the tariff policy will be.
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
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.
