Five factors that move the dollar in Colombia
Oil, interest rates, the global dollar, investment flows and country risk: this is how they influence the price of the dollar against the peso.
The price of the dollar in Colombia changes every day with the supply and demand for foreign currency. These are the five factors that weigh most in that balance.
1. The price of oil
Oil is one of the country’s main exports. When it rises, more dollars flow in and the peso tends to strengthen; when it falls, the opposite happens.
2. Interest rates
Decisions by the US Federal Reserve and by Banco de la República change how attractive it is to invest in pesos. A wider rate gap in Colombia’s favour usually attracts capital.
3. The dollar worldwide
When the dollar strengthens against the major currencies—something tracked with the DXY index—emerging currencies such as the peso tend to weaken.
4. Investment flows and remittances
Foreign investment, purchases of Colombian debt and remittances sent by Colombians abroad increase the supply of dollars in the country.
5. Country risk and local news
Fiscal and political news, along with credit ratings, change investors’ perception and can move the rate within hours.
Follow how these factors combine every day in the TRM analysis.
Keep reading
Financial education
What the TRM is and how it is calculated
The Tasa Representativa del Mercado is Colombia’s official dollar reference rate. We explain who calculates it, which trades it uses and why it changes every day.
· 1 min read