The Colombian peso gains traction against the US dollarreaching three weeks.
He USD/COP It marked a daily maximum at 4,219.99, attracting vendors that led parity to minimum of April 7 at 4,185.00.
At the time of writing, The USD/COP falls 0.49% on Tuesday, quoting at 4,195.00.
The Colombian weight can be seen after disappointing economic data from the United States
- The Conference Board Conference Conference Index decreased to 86 points in April, registering its lowest level since April 2020. This figure is after 93.9 observed in March and 87.7 expected by analysts.
- On the other hand, Jolts employment offers in the United States fell to 7.19 million in March compared to the 7.5 million planned, as well as the 7.48 million recorded the previous month.
- The economic agenda of Colombia contemplates the publication of the unemployment rate for Wednesday, April 30, which was 10.3% in February.
- Similarly, the Bank of the Republic of Colombia will publish its interest rate decision on Wednesday. The consensus of analysts projects that it remains unchanged at 9.50%.
- In this scenario, the Colombian peso operates with profits for the fourth consecutive day, while the USD/COP loses 0.49% on Tuesday, visiting minimums of April 7 at 4,185.00.
US dollar FAQS
The US 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 along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences 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 promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, 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 promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values that overcome 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.
