The US Dollar Vs. The Colombian Peso ............. Who's Up? Who's Down?

June 6 (Reuters) - The Colombian peso outpaced its Latin American peers on Tuesday, clinging to a 10-month high...  With the recent gains, the [Colombian] peso has outpaced Mexico's peso MXN to become the best performing Latin American currency in 2023 with a gain of 14.6%.

Compare those numbers to President Duque's administration when In 2021, the COP depreciated by 10.21% (that was before the election year, before anyone dreamed Petro would become president, so no Petro-effect, just piss-poor performance under Duque, when COP lost strength by 10.21%)

The Colombian Peso gains 14.6% in 2023 with Petro. The USA dollar is in a downward trajectory. Keep your money in COP. Keep your pesos growing, keep your pesos strong, in Petro's 2023 Colombia with the best performing Latin America currency.

The facts are, at the close of 2021 the Colombian Peso stood at just a bit over 3900 to 1 US Dollar.

Today the exchange rate is 4187 to 1 US Dollar, the COP strengthening against the USD.  Just one month ago it was almost 4600 COP to 1 USD, down from its weakest at over 5000 COP to 1 USD in November 2022.

5 years ago the COP was around 2900 to 1 USD.  10 years ago the COP was under 1800 to 1 USD.  So the long-term trend is still the USD strengthening against the COP.

To compare apples to apples and oranges to oranges, we need to look at the same period of time and compare Duque and Petro. For example, looking at the last five months with Petro and comparing with the same five month period with Duque. So comparing last week of December to first week of June for both administrations here are the actual facts:

3513 … Dec. 25, 2020 Duque

3605 … June 4, 2021 Duque

====

(92) COP (devalued by 92), that is, COP WEAKENED UNDER DUQUE (with no Petro to blame)

Looking at the same time period under Petro administration:

4732 … Dec. 24, 2022 Petro

4189 … June 8, 2023 Petro

====

543 COP (stronger against USD), that is, COP STRENGTHENED UNDER PETRO (no credit to Duque)

See the difference? Under Duque the USD was gaining against COP. Under Petro the COP is gaining against the USD, 5.9 times stronger COP performance under Petro than under Duque (543/92=5.9) for the same period of time (late December to early June).

@futuroexpat That may be true; however, to attribute it to Petro's actions MAY be an erroneous assumption as events external to Colombia and Petro's policies MAY have had a stronger influence. In the overall picture it is just noise on the graph.

lpd

To compare apples to apples and oranges to oranges, we need to look at the same period of time and compare Duque and Petro. For example, looking at the last five months with Petro and comparing with the same five month period with Duque. So comparing last week of December to first week of June for both administrations here are the actual facts:
3513 … Dec. 25, 2020 Duque
3605 … June 4, 2021 Duque
====
(92) COP (devalued by 92), that is, COP WEAKENED UNDER DUQUE (with no Petro to blame)

Looking at the same time period under Petro administration:

4732 … Dec. 24, 2022 Petro
4189 … June 8, 2023 Petro
====
543 COP (stronger against USD), that is, COP STRENGTHENED UNDER PETRO (no credit to Duque)

See the difference? Under Duque the USD was gaining against COP. Under Petro the COP is gaining against the USD, 5.9 times stronger COP performance under Petro than under Duque (543/92=5.9) for the same period of time (late December to early June).
-@futuroexpat

You're leaving out that ALL latin american countries were in the same trends before, during and after Duque, except Venezuela and Argentina.  Mexico is an outlier too as they started gaining strength a few years ago.  Before Covid, all pesos were losing to the USD.  Now they are gaining.

The economic strategies of Petro had nothing to do with it.  It's demonstrably false.  The gains against the dollar started against concerns about the USD losing it's world status.

OsageArcher, Lpdiver, mtbe, thank you for your replies.

That the USD gained against COP with Uribismo (2002-2022) is not in dispute. It must just be a coincidence that with Petro as president the COP is gaining on the USD.

But to say: "The gains against the dollar started against concerns about the USD losing it's world status." is disputable, based on hard data.

The US Dollar share of total global reserves in real terms fell from 55% in 2021 (Duque was president), to 47% in 2022 (Petro became president), an 8% decline. The gain of COP on USD was 14.6% in the ten months since Petro became president, far outpacing the 8% global decline in USD reserves. What a happy coincidence!

In comparison to ALL other Latin American countries, Colombia rules, because the COP (with Petro as president) is the best performing Latin American currency in 2023 with a gain of 14.6%. That simply never happened in the previous 20 years of Uribismo. As OsageArcher stated, the trend has historically been the USD gaining, COP losing... until Petro became president. Now the trend is COP gaining. What a happy coincidence!

I give credit to President Petro for the change in a 20 year trend.

If it is true that, as mtbe says, the USD is losing value, I hope more investors put their money into Petro's Colombia with the COP being the strongest in ALL Latin American and a stable store of value.

June 6, 2023 (Reuters) - The Colombian peso outpaced its Latin American peers on Tuesday, clinging to a 10-month high...  With the recent gains, Colombia's COP has outpaced Mexico's peso MXN to become the best performing Latin American currency in 2023 with a gain of 14.6%.

A pronounced trend persists.

The Dollar lost ground once again

during the week ending today, Friday,

June 9, 2023, dropping below the

4200-Pesos level and closing at

4186 Pesos to the Dollar.

The Dollar is now only 8.67 percent

above its value of a year ago versus

Colombian currency.

Source... xe.com USD-COP charting

June 6, 2023 (Reuters) - The Colombian peso outpaced its Latin American peers on Tuesday, clinging to a 10-month high... With the recent gains, Colombia's COP has outpaced Mexico's peso MXN to become the best performing Latin American currency in 2023 with a gain of 14.6%.
-@futuroexpat

Interesting that Futuro didn't post the whole article.  Futuro's claim that it is the Petro's administration that is driving the gain of the COP is...well...partially true...but not in the method a Petroski would like.  If you read the rest of the article, it specifically explains that the COP is gaining because the lower house is freezing debates...limiting Petro's administration's proposals. 

So, yes, Petro's administration is helping the COP gain against the dollar, but it's sparked over allegations of financial irregularities in Petro's election campaign, not the financial wizardry of Petro himself.  It's actually his dwindling approval rating that is driving it...the propensity that his leftist proposals won't be passed.

Read the rest of the article:

"The peso strengthened 0.7% against the greenback,

extending gains from the previous session sparked by allegations

over financial irregularities in Petro's election campaign,

which investors hope could derail the implementation of his

social reform agenda.

    Colombia's lower house on Monday said it would freeze

debates on the labor, pension and health reforms, making it

unlikely the bills will win approval before the end of the

legislative session on June 20.

    "We believe the allegations raised will continue to disrupt

the implementation of Petro's policy agenda. With the agenda now

more unlikely to become policy, Petro may enter a lame-duck

period which can take a certain degree of political risk off the

currency," said Brendan McKenna, international economist and FX

strategist at Wells Fargo.

    Goldman Sachs economists believe Petro's dwindling approval

ratings ahead of October elections coupled with the unpopularity

of the reforms could hurt the chances of their passage in

Congress."

mtbe, what I reported was the factual part of the Reuter's article. I purposely did not include the speculation that is not factual, just opinion. I purposely left out the opinions like: "investors hope" ... "making it unlikely" ... "we believe" ... "economists believe" because that part of the article is not factual, just their opinions.

I understand why you want to include such language because the speculative opinion of economists conforms to your anti-Petro bias.

Thank you for confirming Petro's administration is helping the COP gain against the USD. If Congress succeeds in blocking all of Petro's reforms, I BELIEVE (my opinion) the COP will again begin to fall in value against USD, just like in all the previous presidential administrations.

That's exactly what investing in anything is:  speculation, not facts.  I understand why you don't want to include such language to you pro-Petro bias.

You've just proved that by speculating the COP will again begin to fall against the USD if the Colombian congress blocks Petro's reforms.

Shedding 20 Pesos.

The U.S. Dollar shed another 20 Pesos in value

during the week ended today, Friday, June 16, 2023.

The Dollar ended the week valued at 4165 Pesos.

It's the Dollar's lowest point of the year and

far below its peak, above 5000 Pesos last November.

Source... xe.com USD-COP charting.

June 16 (Reuters) - Latin American currencies were on track for their fourth straight week of gains on Friday as the dollar headed for its biggest weekly slide since January.

I have a feeling this USD downward trend is about to turn around. I have no evidence to back it up, but apparently one can speculate based on bias, personal beliefs, and hunches.

So my hunch is the COP is going to lose to the USD by the end of June. I intuitively FEEL that this week after week slide by the USD cannot continue, even though the USA is facing another government shutdown in October 2023. (Correlation is not causation.)

My speculation is the dollar will regain strength by the end of this month. No facts to back it up. Just my intuition (even though it goes against my bias).

Seems like my hunch about the USD coming back was right. The COP is weakening. After hitting rock bottom on June 15 the COP was at 4148 and has now begun to lose strength against the USD.

The COP, at 4166 on June 18, has changed by 18 in three days, probably because Congress is blocking Petro's sensible reforms, like changing the official hours of the workday so that it ends at 6 pm to increase access to overtime pay, as well as offering overtime for working on holidays and Sundays. Right now many Colombians are being treated like slaves, expected to put in many extra hours with no extra pay. Adopting Petro's reform will benefit millions of Colombians, allowing workers to spend more time with their families, to earn more money if they work overtime, to put more money into the Colombian economy, and to benefit small business in Colombia.

The long downward slide of the USD appears to be ending. The longer Petro's reforms are blocked, the more damage will be done to the COP compared to the USD.

"Vamos a vivir sabroso" (Vice President Francia Elena Márquez Mina, human-rights activist, environmental activist and lawyer)

@futuroexpat So you are claiming predictive excellence over a 4/10 of one american cent over the course of three days? Is that correct?

lpd

All that goes up will come down, and so it is with the current exchange rate USD to COP, currently at $4.165,50. A year ago, on this date the rate was at $3897.94. It'll be interesting to see if that is a support level that holds. When I came to Colombia to live in September 2008, the USD to COP was right at $1 USD/$2000 COP.

When I came to Colombia to live in the 1980s the USD to COP was at USD$1/COP$1000. I have had many years to hone my predictive excellence! LOL!

For the last 30 years of presidents the trend has been a weaker COP... until Petro became president last year to rescue the COP. Now, this year, thanks to President Petro, the COP has been very strong.

However, because Congress is blocking Petro's sensible economic reforms, I expect the COP to continue to lose strength, again, thanks to the efforts of Uribistas and neoliberals like César Gaviria to block Petro, the same politicians who were responsible for the last 30 years of COP weakening.

I wonder what effect Petro's proposal to end licensing and exploration for new petroleum supplies, which will eventually decrease exports that currently (2022) account for around 45% of Colombia's foreign income, will have on the exchange rate of the Colombian pesos. I don't know how this can have a positive effect on the value of the COP against other currencies.

"...cutting new oil contracts could cost the government around $4.5 billion in tax revenue by 2026." https://foreignpolicy.com/2022/06/24/co … h-disease/

I wonder what effect Petro's proposal to end licensing and exploration for new petroleum supplies, which will eventually decrease exports that currently (2022) account for around 45% of Colombia's foreign income, will have on the exchange rate of the Colombian pesos. I don't know how this can have a positive effect on the value of the COP against other currencies.
"...cutting new oil contracts could cost the government around $4.5 billion in tax revenue by 2026." https://foreignpolicy.com/2022/06/24/co … h-disease/
-@CaliRay

Yep.  He says he will increase tourism, and higher taxes on the wealthy, to make up for it.  The wealthy are already hiding their money elsewhere, so the hiding will just become greater...or they will leave.  We've seen it in the Scandinavian countries, and people are leaving some US States by the droves.  Tourism won't make up for it.  There is an uptick now that Covid is unofficially over, and just like Biden saying he created jobs, Petro will take credit for an increase in tourism too.

Unfortunately, the downturn due to loss of revenue from oil may not be seen for a few years, after Petro is gone, and unaccountable.

Under Petro Colombia’s economy grew at 8% last year.

Under Petro Colombia's oil and carbon industry (which make up 55% of its exports) have benefited. For example, major energy companies like El Grupo Energía Bogotá had record earnings of $6,8 billones, up 23.7% from the previous year under Duque.

Under Petro the COP has been strong against the USD, but today Congress blocked Petro's reform for workers. Those who want to topple Petro should be careful what they wish for. The trouble with overthrowing a president is that he may fall upon those doing the toppling. And the COP may be the worse for it.

Dollar droop.

The U.S. Dollar is persistently lower

versus the Peso.

The Dollar lost another 20 Pesos in value

versus the Colombian currency this week,

closing on Friday at 4145 Pesos.

Source... xe.com USD-COP charting

A happy Saturday June 24, 2023 to all. It's good to be alive!

Today the USD made a big 23 COP comeback, fighting its way from 4145 to 4,168 COP though the USD is still weak and cowering in fear of the mighty COP. The COP will erase those 23 COP gains if, when least expected, the USD carelessly finds itself "dando papaya." This is my expert prediction.

USD 1 = COP 4168 (as of 2023-06-24 12:00:00 UTC)

Source: Xe.com

The USD fought back and gained seven pesos, (30% of its previous week's loss), against the COP this past week. The USD struggled but could not make up the other 70% of its loss to COP.

4168 ... 2023-06-24, 12:00:00 UTC

4175 ... 2023-06-30, 21:34 UTC

In reality this indicates a fairly stable economic straight line relationship between COP and USD.

Will the COP take this seven peso loss lying down, or will it fight back against USD next week?

Tune in next Friday, same bat cave, same bat channel.

November 4, 2022, the rate is 5092 Pesos to the Dollar.

July 7, 2023, the rate is 4155 COP to USD. (Source: xe.com)

USD has lost 18.4% of its value to purchase COP.

An eight-month long downward slide for USD. This macroeconomic phenomenon of USD devaluation means that the USD is losing nominal value against the COP.

Now may be a good time to invest in Colombia, buy property, start a business. The COP is only getting stronger every week and USD is losing value. The future is bright in Colombia. Oh, unwithering glory! Oh, immortal jubilance! Casting off furrows of pain of the last 50 years of conservative governments in Colombia, goodness now arrives.

Since late 2022 the direction of valuation of USD to COP is reversed under the Petro administration. Week after week after week the Colombian peso recovers its glory.

Vamos a vivir sabroso!

Living well is the best revenge!

COP gains 18.4% in value!

"O, gloria inmarcesible!

O, júbilo inmortal!

En surcos de dolores,

el bien germina ya."

(excerpted from the Colombian national anthem)

So on a ten year return the Dollar is up 117.49 % or 11.75 % per year. This is amazingly close to what my investments have returned over the last forty years since IRA became available. On a five year return the rate is 44.61 % or 8.92 % per year. The two year return drops down to 4.21 % per year and the one year return is -6%. That does seem to support the thought of making a large purchase or investment in Colombia, although I am not sure how the inflation in Colombia compares to that of the USA.

I recall that the apartments in Poblado were very cheap in the seventies compared to todays prices, although the quality was subject to question.

I compared the performance of other currencies and was surprised at how poorly Colombia fared based solely on exchange rates. I don't really know how to attempt to factor in inflation. Mexico was next with a ten year increase of 33.78, then Pero at 31.01% for the ten year gain. Then Costa Rica at 9.85 for ten year gain.

After that Guatemala, Aruba, Belize, and Trinidad were all very low because they either use the US dollar or seem to have the exchange rates pegged.

I never realized how well the dollar performed in Colombia compared to other countries or really tried to analyze it.

Food for thought.

elp

Dollar slumping towards 4000.

The U.S. Dollar's descent puts it at

almost 100 Pesos below last week's

close, ending this week at 4059 Pesos

to the Dollar.

The Dollar is now valued at almost

ten percent below its July 2022 value

versus the Peso.

Source... xe.com USD-COP charting

Since the beginning of this topic by ccmedia, when the rate was COP 5092 to 1 USD in Nov. 2022, the USD has consistently lost compared to COP, now a USD loss of 1007 COP.  (5092-4085)

(Source: xe.com Jul 15, 2023, 05:08 UTC)

As lpdiver noted above, in the last 40 years this has not happened. In the last 40 years (under Uribista and neoliberal administrations) the COP has always lost to USD. In the past it was good to have USD Dollars because they held value compared to COP. Now it is good to have Colombian Pesos (COP).

For the past eight months (during a pragmatic Petro administration) the COP devaluation situation of the past 40 years is reversed. Now USD Dollars are depreciating. If you have USD Dollars you are losing COP purchasing power.

The USD Dollar is still strong in other parts of the world. It is still a world currency. It just can't compete against the new COP strength. USD is losing value in Colombia.

A USD Dollar depreciation of 24.65% in the last eight months to be exact.

(Calculated using this Currency Depreciation formula: Beginning minus Ending = 1007, divided by Ending = 24.65%.)

Those who last year, out of fear of Petro, moved assets out of Colombian COP and into USD Dollars are losers.

USD is strong. COP is stronger. This is not my opinion. This is a fact demonstrated by math, based on xe.com numbers, week after week after week.

You can "prove" anything by where you put your starting point and your end point...but that does not tell the whole story. People do this when they are trying to sell something that isn't quite true, or push some agenda...

Go here and look at USD to COP for 25 years, or ALL to go back even further:

https://tradingeconomics.com/colombia/currency

Overall the USD has continued to strengthen against the COP, for more than three decades - more than 30 years. But you can choose - or "cherry pick" - any interval to "prove", demonstrated by "math", that it's either up or down...

October 1992 1 USD = 690 COP

October 2022 1 USD = 4056 COP

@OsageArcher ... I did not pick the starting point for this topic, November 4, 2022. It was started by ccmedia and I used the starting date and the starting figure cited by ccmedia ... 5092. Now USD Dollar is 4058 as of Jul 15, 2023, 15:26 UTC (Source: xe.com)

When USD Dollar strengthening has happened for 30 years (your number), it is difficult to believe USD Dollar will not continue strengthening, yet that is what we are seeing right now.

I am just describing objectively the fact of what has happened since ccmedia started this topic on November 4, 2022, which is after publicly available 2022 election results. I am using publicly available exchange rates, and a transparent currency depreciation formula, to show how the USD Dollar has lost value, in a continuous decline, month after month, for eight consecutive months.

I am not saying the weakening of the USD Dollar, compared to the COP Colombian Peso, is good or bad. It is reality. My dollars are also becoming weaker every week. That is a fact. My opinion is that this 30 year change of direction is related to something that happened on August 7, 2022. I may be wrong about that. But I am not wrong about the strengthening COP Colombia Peso.

That is why I am keeping my COP Colombian pesos instead of buying more USD Dollars. If you are not buying USD Dollars, you are in tacit agreement that COP Colombian Pesos are winning.

It is what it is... whether we like it or not.

When USD Dollar strengthening has happened for 30 years (your number), it is difficult to believe USD Dollar will not continue strengthening, yet that is what we are seeing right now.
-@futuroexpat

They are not my numbers, they are from the site I gave the link to.  They are publicly available historic numbers.  You can try to twist that as you wish but it's the facts!

@OsageArcher ... You wrote "25 years" and you wrote "30 years" ... You did not write 50 years, you did not write 10 years. Your numbers were 25 and 30. Those are the numbers I was referring to as your numbers. (without any twisting required!)

From 5092 COP to 1 USD on Nov. 4, 2022 we are now at 3994 COP to 1 USD as of Jul 19, 2023, 5:10 PM UTC

COP beatdown of USD is kinda brutal.

It is a straight line depreciation heading to COP 2000 to 1 USD... if it continues as it has the last eight months. Or maybe the USD bounces back and we have COP 7000 to1 USD? Don't hold your breath.

I have income in COP. I am not buying USD. I want to keep my COP in Colombia. Correlation may not be causation, but coincidentally with President Gustavo Petro the COP just keeps getting stronger.

Now it's below 4,000

FFFFFFFFFUUUUUUUU....

@ChineduOpara ... For those of us with income in COP this is not bad news. I receive income in pesos in COP and spend pesos in COP. I could buy USD dollars for less COP pesos right now, but I want to keep COP pesos in Colombia (earning 14.5%) ... USD dollars are not at all attractive as an investment.

Now it's below 4,000
FFFFFFFFFUUUUUUUU....
-@ChineduOpara

If it makes you feel better, live streamer Loren Lowe in Armenia said recently that anything above $3,800 was gravy for expats.

Also, influencer William Harrison of Armenia frequently has said "his experts" including XE.com have it back up to $4,700 by the end of the year.

COP at 4596 on May 11, 2023.
COP at 4259 on June 6, 2023 at 3:44 PM UTC
In one month the USD has shown a straight-line decline of 337, declining in value day after day after day, which I think is USD losing about 8% of its value in just one month, compared to a strong COP.

Keep your money in Colombia! There doesn't seem to be an end in sight for USD devaluation.
-@futuroexpat

A really smart expat had left a comment on this thread asking whether we should be buying pesos when the peso reached resistance of 5,000, but it was deleted--probably in a bout of pomposity.

@Mr. Barley ... Did he say why COP3800? Why not 3900? Or 3700? These pronouncements seem so arbitrary. But then again, that is what makes financial commentary so easy. It's mostly just opinions and anyone can have one.

@Mr. Barley I certainly hope you're right!

@futuroexpat Well I am happy for you 😄 I earn in USD and I have a reasonable bucket of savings in COP in my Bancolombia account. The thing is, I wanted to buy property this year, and now that opportunity window seems to have closed... my property-purchase budget was GREAT when the COP was at 4,700 or even 4,500. But at 4,000 (now less!) I can't afford the property I wanted. So my plans are on hold. In fact, not only on hold, but altered completely cuz my apartment lease ends in December. And they keep raising rent every time the lease renews. Bummer.

@Mr. Barley I certainly hope you're right!
-@ChineduOpara

Me too, since I plan to visit Colombia in 2024.  Also, I have a casual interest in owning an apartment in Colombia, so I would have a place to keep my stuff, when I have to return to Ecuador on my tourist stamp.

If you don't mind me asking, James L. reminded us recently that digital nomads only get 180 days on their visas, mas o menos.  Are you going to be able to re-enter on a tourist stamp for the rest of the year?

@ChineduOpara ... "And they keep raising rent every time the lease renews. Bummer."

A realtor told me that you can just refuse to pay rent increases. Tell them you are willing to stay, but at the current payment.

An owner may be willing to keep a good renter at current rate who pays on-time and takes good care of the property. Otherwise the owner risks the unit being vacant (zero rent for the owner). If they insist on increasing the rent, they take a chance on losing a known good renter for an unknown future renter who may pay late and not take care of the property.

Talk to them and propose staying at existing rental payment. You might be surprised. They might be willing to eliminate or reduce the rate increase. The worst that can happen is they say no and you have to find a new place at a lower rent.

@Mr. Barley Well if I cannot renew my Digital Nomad Visa by February, then I'll just leave and come back on a Tourist Visa and stay 6 months. Then, for the remainder of 2024 I'll probably go to Thailand. Been meaning to check it out.

The main challenge for me is, where to keep my stuff while I am out of Colombia. I haven't bought a property yet, so I am kind of in limbo...