The dollar began its price on Monday downwards, consolidating at $3,898. This translates into a decrease of $14 compared to Friday’s close, thus registering a variation of -0.35%. The Representative Market Rate (TRM) remains at $3,916.39.
The dollar continues to show a strong dependence on the decision that the board of directors of the Federal Reserve (Fed) may make regarding interest rates. This reliance is attributed to the fact that lower rates would lead to greater investment opportunities and more dollars circulating in countries like Colombia, which would imply a cheaper currency.
In its most recent meeting, the Fed voted to keep rates stable, and it is expected to be preparing its first reduction, in accordance with the drop in inflation in the United States. The volatility of the exchange rate has been high, with last week’s factors including the World Economic Forum meeting in Davos and statements from central bankers trying to temper expectations about quick cuts in interest rates.
Regarding international components, the S&P announcement also had a slight and short-lived impact on the exchange rate. This week’s credit rating decision from Standard & Poor’s maintained the grade (BB +) but lowered the future outlook from stable to negative.
What will be the factors that will influence the dollar this week? On the international side, an adjustment of the market compared to the expectation in the interest rates of the Federal Reserve (Fed) has been moderating. The next meeting is anticipated to take place between January 30 and 31, and a rate reduction is not expected yet.
Among the international factors, inflationary impacts such as disruptions in the Suez Canal and drought in the Panama Canal could prevent a possible rate cut from the Fed. Data that will have the greatest influence on the dollar in Colombia include the release of the fourth quarter GDP data from the United States and the first decisions by central banks on their interest rates.
It is possible that in this scenario, the dollar could touch $4,000 by the end of the week. For the latest economic news, we invite you to visit El Espectador.