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

Well if this peso strength coninues, as well as inflation  and an increased  salario mínimo there is another potential issue for expats besides cost of living.

Those on social security may not qualify for a pensionada visa because they wont meet the 3 salario mínimo criteria and Rentists visa types wont have sufficient income qualify for 10 salarios mínimos.

The average exchange rate over the last 5 years is 3927.50 to 1

The USD is strong. The US economy is strong. Compare US inflation rate to OCED developed country rates. Compare growth to OCED countries. Today's 3900 COP/USD rate is not due to a weak dollar or a weak US economy.

Today's 3900 is due to a strong Colombian peso.

There is no indication that events, foreign or domestic, are going to cause the Colombian peso to lose strength, especially if Brent oil continues to sell at high prices and Petro's reforms go forward. Petro's education reforms were recently introduced and initial feedback is positive.

Fedesarrollo recently released the Consumer Confidence survey for August 2023. The Colombian medium income and low income groups (the vast majority of the Colombian population) expressed much more optimism than the upper income group.

The minority in the upper income group, those who administer the capital markets: Superfinanciera Colombia, Bolsa de Valores de Colombia, Asobolsa, etc. will eventually catch up with the rest of us and realize Colombia is getting better and better.

When this thread opened on Nov. 4, 2022 the COP/USD rate was 5092. In the last ten months the USD has not been able to go over 5000 again, instead steadily declining due to the strength of the Colombian peso during the Petro administration.

@futuroexpat This is great news for Colombians in general, but a real bummer for us Dollared expats. It seems I missed my "window" to invest when the COP was 4,500. At least I made 1 or 2 big transfers (about $7K total) during that period. Better than nothing, I suppose.

Regardless of my selfish thoughts (heheh)... I do hope more Colombian people get raised out of poverty within my lifetime...

@ChineduOpara ... Poverty in Colombia has gone down since the 1990s. Poverty is defined as living on less than USD$5 per day.

Here is a chart showing the decline of poverty in Colombia.

https://www.macrotrends.net/countries/C … verty-rate

@futuroexpat I know it's declined, obviously. I just hope it continues to decline. So that we can get to a point where the beaches in Cartagena become actual beaches for peaceful relaxation, not a noisy swarm of vendors and "masajistas" who don't respect personal boundaries. Also, so that we can get to a point where there aren't a handful of beggars outside major supermarkets. That's what I meant 😅

Modest gain.

The U.S. Dollar posted a modest gain against the Peso

in the week ended September 22.

At the close on Friday, the Dollar was worth 3984 Pesos,

16 Pesos shy of the 4000 Pesos mark.

Source... xe.com USD-COP

A two-week upwards trend.

The U.S. Dollar has been moving upwards during

the past two weeks versus the Colombian Peso,

its value increasing by more than 220 Pesos

since September 20th.

Entering today's exchange hours, the Dollar is

valued at 4161 Pesos.

Source... xe.com USD-COP charting

In layman's terms that us mortals can understand just why with the US and basically the worlds economic complex problems (eg. inflation, gas prices, war, political distrust just about every country, unemployment, interest rates, etc., etc...)..............why is the dollar gaining strength against any currency let alone the Colombian pesos?

Riddle me this, I just don't get it, what gives?

I'm not complaining as I earn dollars but just don't understand what is going on.

One important factor is the Dollar's status as

the world's reserve currency for commerce between

and among trading nations.

The Chinese currency and a proposed new

currency that would be initiated by the so-called

BRICS nations are far from challenging the U.S. Dollar's

pre-eminence as the global reserve currency.

The theoretical establishment of a BRICS currency

backed by gold would potentially be a monumental

undertaking.

The Dollar was taken off the gold standard in 1971 ..

resulting in the USA having the ability to expand

Dollars in circulation through the unilateral

expansion of debt, a.k.a. printing new money.

cccmedia

Dollar boomeranging higher.

The U.S. Dollar has been persistently moving higher,

gaining hundreds of Pesos in the week

just ended on Friday, October 6, 2023.

At the close on Friday, the Dollar's value

was pegged at 4325 Colombian Pesos.

Source... xe.com USD-COP charting

Slippage.

The U.S. Dollar slipped down almost 100 points

in the week just ended on Friday afternoon.

The Dollar ended the week valued at 4229

Colombian Pesos.

Source... xe.com USD-COP

How stable is this?

The U.S. Dollar ended the week where it started,

just a gain of two Pesos.

At week's end, the Dollar is valued at 4231 Pesos.

Source... xe.com USD-COP charting

"The Dollar was taken off the gold standard in 1971 ..

resulting in the USA having the ability to expand

Dollars in circulation through the unilateral

expansion of debt, a.k.a. printing new money."

--ccmedia

Taking the dollar off the gold standard has been good for the United States.

Printing new money endlessly and creating debt has been good for the USA dollar.

The evidence is the USA dollar has now been off gold more than 50 years with

no negative effects in 2023: no hyperinflation, no economic depression, no stagnation of economic growth.

Here are the facts:

JOB GROWTH:  Biden's USA economy continues to add jobs at record rates—more than 13.9 million since President Joe Biden took office. The USD off the gold standard has not stopped USA job growth.

ECONOMIC GROWTH:  Yesterday the USA issued a stunning report that Biden's USA economic growth is  outstanding. The USA economy grew at an annual pace of 4.9% in the third quarter of this year, which puts Biden's USA economy at the forefront of most of the world. Taking the USD off the gold standard has not affected USA economic growth.

INFLATION:  Inflation is back in the range that the USA Federal Reserve prefers—it’s now at 2.4%, close to the Fed’s target of 2%. Taking the USD off the gold standard has not created hyperinflation.

The USA is outperforming forecasts made even before the pandemic began for where the economy would be now, even as other countries are worse off.

CONCLUSION: The USD being off the gold standard for 50+ years, the USA having enormous amounts of USD national debt, has led the USA economy to be one of the strongest in the world.

@futuroexpat when government debt fuels growth in an the current increasing cost of money, instability is next.

US national debt as a function of GDP far exceeds the growth rate.  Not only a poor statistic, but it's dishonest.

Reopening the US economy after COVID lockdowns are not an example of job creation. Another statistic effectively used to lie.

I just read quite a bit of nonsense about the US economy. All indicators reveal a near imminent crash across the board. Inflation is way over 2.4%. How the inflation number is being determined isn't honest. A closer look would indicate something north of 10%. With interest rates for home mortages at just below 7%, potential buyers are being priced out of the market. It's become cheaper to rent than to buy in many areas. Credit card debit is higher than it's ever been as more and more people are living on credit debt.

It's anticipated that 1.5 million car loans will go into default in the next year. There's more, much more but this is enough to know the economy is in trouble.

@futuroexpat Inflation is being drivin by the U.S. governments unchecked, rampant spending and the Fed unbridled printing of money.  It will come crashing down one day because it's unsustainable.   No one with a once of  sense believes inflation in the U.S is only 2.4% it way over that walk into a grocery store and see. 

Long time lurker, first time poster:

Curious why the administrators permit someone posting what they believe are 'facts', when in fact they are posting politically motivated gaslighting fantasies.

I think I saw someone's post was removed because it mentioned a certain laptop in another thread...I was able to read it, then a few days (or hours) later, it was removed by Admin.

What gives?

@GuyBThis is a problem on every social platform.  Admins are tasked with a never-ending impossible job.   Removing posts for nonfactual information requires fact checkers and even fact checkers have their biases.   Probably the best solution I have seen so far is the "community notes" idea that Twitter / X is implementing.

This recent, ridiculous, post could be someone just trying to troll and get arise out of people, or it could be a person that actually believes what they are posting.  It is sad, either way.  I suspect the admin will not jump in because it has not become offensive enough, just politically motivated BS.  It would be nice if the system could allow each of us could just block posts from users that we feel are not adding honest value to the conversation.

The pers that posted this   false report on the economy is ver misguided. the fac is that the economic infla numbers are   not real, and the int rates are one indicator of this .  credit card interest rates are now   between 27 & 33 percent. and a home mortgage of 320,000.00 was about. 1,350.00 and now the same mortgage will cost you about 2,350.00 a month. and the cos of food is   still climbing with no sign that it won continue to climb nex year.  there are other indicators , you n to do some real research and not just regurgitate what you hear on news stations like cnn and others.  do some real research and you will have a different opinion !!!

@futuroexpat

      Sounds like great stuff ? So apparently with crude oil prices along with the price at the pump rising in the US along with about a seventeen percent in reality increase in inflation the highest in almost fifty years costing US consumers an extra $7,000 anually along with a dead home sales market because of eight percent mortgage rates ? Yeah other than that this  current administration has done a great job in a short three years .Remember three years ago the US was energy independent controlling the petrol market and not OPEC for the first time in my long lifetime .

@nico peligro

          All the inflation that has occured in the US is tied into the drilling , fracking and producing everything tied to oil production began on January 21 2021 in the Oval office . Bidens war on fossil fuel

has brought down the value of the dollar . People didn't like Trump but personally i could care less

it's the economic policies and my DOLLAR that i care about .

The Dollar's Dip.

The U.S. Dollar is back below the 4000-Peso level

as of this morning, Novembeer 5, 2023.

The value in early trading put the Dollar at

3986 Pesos on Monday.

Source... xe.com USD-COP charting

Dollar cracks 4000 level again.

Modest gains in the value of the U.S. Dollar

sent it back above the 4000 Pesos level this week.

The Dollar gained 46 Pesos during the week,

closing on Friday at 4032 Pesos in value.

Source... xe.com USD-COP charting

In the last week the USD has gone down 2.79% and in the last year USD has gone down 13.21%

Such a sustained strengthening of the COP, in the last 16 months since Petro was elected, never happened under any of the previous Colombian presidents of the last 40 years.

In all Latin America there have only been three currencies that have shown strength and have appreciated in value against USD in the last year, those of Brazil, Mexico, and Colombia.  (Something about leftist presidents?)

Some opine that the USD has been affected by world events. I opine that Colombian President Petro's policies have led to stability and strengthening of the COP.

President Petro may also be the first president in Colombian history to contribute $81,749,000,000,000.00 Colombian Pesos to the Colombian economy without raising taxes. (That is COP$81 Trillion, the equivalent of USD$20 Billion in today's economy at today's exchange rate.)

Petro has ordered expediting the retrieval of the San Jose Galleon before his term ends in 2026, calling for a public-private partnership (i.e., more job creation to combat poverty.)

In his first speech as President-elect Petro said: "“We are going to develop capitalism in Colombia."  So, a public-private partnership is a capitalist kind of thing to do for efficiency and accountability of the money Petro will be adding to the Colombian economy. Petro is keeping his promise ... in spite of those who try to stop him.

In my opinion the strength and stability of the COP under President Petro the last 16 months speaks for itself. By investing in COP at the time of Petro's inauguration I am ahead of the game. When Petro defeated Rodolfo Hernandéz, if I had believed those who said Colombia was going to become Venezuela, if I had engaged in capital flight and bought USD, my capital would have lost 13.21% value. Looking at the bottom line I am glad I did not. I believed in Petro, invested in Colombia, and my net worth has increased ... and that is what capitalists do, right? 

SOURCE:

Dólar: cotización de apertura hoy 15 de noviembre en Colombia

Se registró una baja en los valores del dólar con respecto a la jornada anterior

Por Newsroom Infobae, 15 Nov, 2023 09:17 a.m. EST

A two-year overview.

The U,S. Dollar had another modestly positive week

versus the Colombian Peso, rising in value to the tune

of 40 Pesos.

For a while, the relevant xe.com chart has shown the

Dollar channeling almost four percent above its level

of late 2021 when compared to the Peso.

At the close on Friday, November 17, 2023,

the USD-COP chart showed the value of the Dollar

at 4072 Pesos.

@cccmedia ... There are standard formulas to calculate COP currency valuation given the base currency of USD. For the formula I used the figure you cited that began this thread: 5092 and the current figure you cited: 4067  (SOURCE OF TODAY'S RATE: Xe.com Nov 18, 2023, 10:12 UTC)

By plugging in the figures provided by cccmedia, here is what we get:

Relative to USD, COP Appreciated   25.203%

Relative to COP, USD Depreciated   20.13%

My conclusion is it was better to have COP investments than USD investments these past 16 months.

I don't think world events can be blamed for the USD depreciation. World events are always happening. As for the COP appreciation there are also national events to consider, like changes in La Casa de Nariño.

There must be a reason COP has appreciated 25.203% in the last 16 months and USD "no ha podido competir con el peso colombiano." I wonder.

Something must be different after August 7, 2022. I wonder what it could be.

If you look at the 10 year trend of USD to COP you will see that the USD has gotten consistently stronger against the COP, with naturally occurring ups and downs along the way:

https://www.xe.com/currencycharts/?from … p;view=10Y

When Petro first took power there was a fair amount of panic due to his socialist policies.  That's why investors and ordinary people caused the USD to go over 5000 COP to 1 USD, as they lost confidence in Colombia's government.  But as time went on and people saw that Petro was fortunately not able to implement by force all he wanted due to strong opposition, the USD settled downward a bit to where it is now, hovering around 1 USD = 4000 COP.

To ignore the long-term trend over years and to focus only on short-term blips where the value of a currency goes up and down, is not financially sound behavior.

@nico peligro

            When i initially moved here in 2008 the exchange rate for the next full year was around 1$usd = $18.55 cop .

Later in 2009 it hovered around two to one for most of that year .

@futuroexpat

          I would speculate that if Trump wins re-election one of his first actions is going to be returning the US to being energy independent  once again and returning America  to the numer 1 producer of oil and natural gas which in turn will drive the price of oil down and the US$PETRO dollar strength will send the dollar soaring once again . One more note as i stated in a previous post when i moved here almost sixteen years ago the dollar exchange rate was 1$USD - $18.55 COP Tthe whole following year it hovered around two to one .....

A narrow channel.

The U.S. Dollar spent the week in a narrow channel

above 4000 Pesos.

The Dollar ended the week on Friday, November 24,

down 29 Pesos from the previous Friday, now standing at

4041 Colombian Pesos.

Source... xe.com USD-COP charting

A down-day for the Dollar.

The U.S. Dollar fell about 50 Pesos on Friday, December 1,

taking the greenback back below the benchmark

4000-Peso level as the week ended.

The Dollar concluded the Friday session at 3965 Pesos.

Source... xe.com USD-COP charting

@cccmedia

          I believe currently 90% of all foreign bank transactions involve the $USD , that has been challenged many times over the past decade or so with BRICS  but when you consider the economic problems facing China and the Russian Ruble what is actually left of that coalition economically to use as leverage against the $USD ?

A tight channel.

The U.S. Dollar stayed in a tight channel around 4000 Pesos

this week, the week ending today, Friday, December 8, 2023.

The week ended with the Dollar pegged at 3982 Pesos,

according to xe.com USD-COP charting.

OMG! USD still at 3983 on Dec 10, 2023, 12:19 UTC.

I am beginning to think the 16 month decline in USD compared to COP may not be a "short term blip."

Ignoring a long term trend and keeping your money in a losing currency like the USD may not be sound economic behavior.

The Inflation Rate in Colombia decreased to 10.15 percent in November from 10.48 percent in October of 2023 according to Trading Economics global macro models and analysts.

That means a Bancolombia risk-free savings CDT in COP is not a bad investment. Mine was locked in a while ago and is earning a risk-free 15% in returns. I am getting a 5% positive return over and above the Colombian inflation rate.

The situation for the USD is the reverse. Some here do not believe the 3.1% US inflation rate reported by CNBC. They say it is really 10% (though they provide no evidence). If inflation in the US is 10% then the high yield USD savings accounts returning 4% to 5% are not keeping up with the supposed 10% USA inflation rate. Your money in USD is losing 5% in the USA when it could be earning 5% after inflation in Colombia COP.

But let's say the real inflation in the USA is 3.1%, as reported by CNBC, then risk-free high yield USD savings accounts are still earning only 1% to 2% as opposed to the 5% earnings of risk-free COP CDTs. Here is what CNBC is reporting:

"In the latest University of Michigan consumer sentiment survey released Friday [December 8, 2023], the one-year outlook for the inflation rate slid to 3.1%, down sharply from 4.5% in November and the lowest since March 2021. The five-year outlook also moved lower, down to 2.8% from 3.2% the previous month." The USA seems to be getting better with Biden. But a risk-free USD savings account cannot compete with a risk-free COP CDT.

Anyone who thinks a Bancolombia CDT is not risk-free should maybe examine Bancolombia's portfolio. Bancolombia has total assets of COP338,183.9B and total equity of COP38,494.7B. Total deposits are COP244,908.7B, It earns a Net Interest Margin of 6.8%.  Bancolombia also has the highest credit risk rating, (AAA).

In the USA the USD credit rating is declining. On August 1, 2023, Fitch Ratings, one of USA's three major credit rating agencies, announced that it had downgraded the US credit rating from AAA to AA+... that's lower than Bancolombia's AAA rating.

As previously reported USD has lost 20% to 25% value compared to COP these past 16 months. A time period that I do not consider to be an insignificant "short term blip."

For the economic solvency of all expats I hope the USD can recover a bit before the end of the year. The USD had better hurry up. There are only three more weeks in the year. With the performance of the Colombian economy showing stability and strength under Petro these last 16 months, I am not worried about the strength or health of COP at all, as evidenced by the bottom line for CDT's in Bancolombia.

@futuroexpat Man, please don't be telling everyone about the Bancolombia CDTs... they'll flood the system, Bancolombia will reduce the interest rates, and folks like you and I will be back to square one! 😅

    @futuroexpat Man, please don't be telling everyone about the Bancolombia CDTs... they'll flood the system, Bancolombia will reduce the interest rates, and folks like you and I will be back to square one! 😅
   

    -@ChineduOpara

This is one reason why the COP has become stable.  The central bank keeping the rates at 13.5%, so money flows into Colombia.  It's not Bancolombia setting the principle rates.  It's not the current Administration either.  The central bank is separate from the government...or supposed to be.  People are already aware of it...but for how long?

@GuyB Some people are aware, but not that many. Even local Colombians don't seem to know (nor care). Case in point: I know a business owner here in Barranquilla who kept insisting that the CDTs only give 0.2 - 1.2% interest. She didn't dig deep enough to see that there is an investment minimum that will give the 12.5% that I have been getting. And when I explained it to her, she got dismissive and defensive, saying that if she had that much cash, she'd rather put it into her business than let it sit in the bank.

I see this same attitude in so many Colombians, across different walks of life, and various topics/conversations. I am not sure if this is just my bad luck, or if the willful ignorance is cultural (or if it's the culture specifically on the north coast) but they seem to have an EXTREMELY difficult time saying, "Oh that's new information to me. I didn't know, tell me more, or tell me how to find out more."

Anyway, in this case, their loss... it's better that they DON'T know. Let's keep the good CDT information to ourselves!

@ChineduOpara ... Thanks for letting me know. I have been guilty of letting people know about the 17% CDT in Medellín, and then the 15% CDT in Bancolombia.

But now the rates are going down, so those high rates are no longer available if you didn't lock them in when they were announced. Now Bancolombia is offering around 12%. Next year, who knows?

Anyway I thank you for letting me know. I will stop publicizing the incredible deals I find in Colombia that outperform the USD.

@futuroexpat I am kinda jealous that you got the 15 or 17% APRs... I shoulda been doing CDTs ever since I opened my Bancolombia account in April 2022. Oh well... better late than never!