The price of the US dollar rises against the Colombian peso, bouncing from a two-day low of 4,328.23, where it attracted buyers who took the cross to a new high of almost thirteen months at 4,418.60.
USD/COP is trading at 4,416.50 at the time of writing, gaining 0.49% daily.
The Colombian peso depreciates due to an improvement in the United States ADP employment report
- USD/COP set a new high not seen since October 6 at 4,418.60reflecting the strength of the Dollar against emerging currencies.
- The US ADP employment report showed an increase of 233,000 new positions, exceeding the estimated 115,000.
- The Bank of the Republic of Colombia will publish its interest rate decision on Thursday, with a cut of 75 basis points expected to 9.50% from 10.25%.
Interest rates FAQs
Financial institutions charge interest rates on loans from borrowers and pay them as interest to savers and depositors. They are influenced by basic interest rates, which are set by central banks based on the evolution of the economy. Typically, central banks are mandated to ensure price stability, which in most cases means targeting an underlying inflation rate of around 2%.
If inflation falls below the target, the central bank can cut base interest rates, in order to stimulate credit and boost the economy. If inflation rises substantially above 2%, the central bank typically raises core lending rates to try to reduce inflation.
In general, higher interest rates help strengthen a country’s currency by making it a more attractive place for global investors to park their money.
Higher interest rates influence the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or depositing cash in the bank.
If interest rates are high, the price of the US Dollar (USD) usually rises and, since Gold is priced in dollars, the price of Gold falls.
The federal funds rate is the overnight rate at which U.S. banks lend to each other. It is the official interest rate that the Federal Reserve usually sets at its FOMC meetings. It is set in a range, for example 4.75%-5.00%, although the upper limit (in this case 5.00%) is the figure quoted.
Market expectations about the Federal Reserve funds rate are tracked by the CME’s FedWatch tool, which determines the behavior of many financial markets in anticipation of future Federal Reserve monetary policy decisions.
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.
