The Colombian peso continued it retreat against the US dollar Wednesday, opening at its lowest value since January 2011. The dollar rose to above COP1,900.
The peso had been losing value since the beginning of this year, creating expectations the dollar would break through the COP1,900 mark before the end of 2013.
The Colombian currency had been decreasing in value since the beginning of the year, months after the Colombian central bank began interventions in the country’s key interest rate and the massive purchase of dollars.
Since January 1, the Colombian currency lost 6.01% in value
According to Dow Jones, the peso’s weakness is derived largely from recent strength in the dollar against a host of currencies as investors bet the U.S. economy will continue to gain speed even as growth in Europe and elsewhere stalls.
The drop coincides with a drop in oil prices worldwide. Colombia is one of Latin America’s largest oil exporters. Additionally, the sector is the largest beneficiary of foreign direct investment.
A fall in foreign investment and the consequent fewer dollars coming into the country are the primary causes of the peso’s retreat against the dollar this year, economist Jose Manuel Restrepo told Caracol Radio last week.
Restrepo said breaking through the COP1,900 mark “makes us winners, because it will strengthen the domestic economy.”
MORE: Dollar could climb to COP1,900 this year: Economist
Also the struggling euro has gained against the peso in the course of the year; After hitting a COP2,298.97 low on January 4, the European currency went up 4.94% against the peso and reached COP2,452.51 at the opening Wednesday morning.
