Colombia Peso: The Outlook

The Colombia peso has lost 52 percent of its value compared to the US dollar the past 12 months. (Latinvex collage/Banrepublica, US Defense Dept)

Will the peso depreciate more or start appreciating?


CALI, Colombia -- While the government emphasizes the benefits of Colombia’s peso depreciating – especially for exporters – many local companies and economists are expressing concern about the impact on everything from imports to inflation.

The peso (COP) has lost 52 percent of its value compared to the US dollar the past 12 months, going from 1,972 pesos per US dollar to 3,001 pesos per US dollar. In the eight-month period from December 31st to August 31, it lost 29 percent, going from 2,376 per US dollar to 3,075 per US dollar.

Both President Juan Manuel Santos and finance minister Mauricio Cardenas have repeatedly said the depreciation is a natural result of the lower oil and mining revenues, which at one point overheated the economy and had led to an over-appreciation of the peso.

Meanwhile, the central bank is split on what action to take. However, a central bank survey among economists shows that most believe the bank next month will raise interest rates f
or the first time in more than a year to curb the fastest inflation in six years, Bloomberg reports.

What is the outlook the rest of the year and next year?

Latinvex asked several experts.

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Keywords: Bulltick Capital Markets, China, Nomura, oil, mining, Organizacion Luis Carlos Sarmiento Angulo Ltda, Standard Chartered Bank, US

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