The Impact of Fed Decisions on the Dollar: A Case Study in Colombia

The price of the dollar continues to show a high dependence on the decisions made by the Fed regarding interest rates.
The dollar closed its price on Thursday higher, registering $3,873, this translates into an increase of $53 compared to Wednesday’s close. This implies a variation of 1.38%. The Representative Market Rate (TRM) remains at $3,844.81. Since December 25, the dollar has shown a dizzying decline, falling more than $100 in just three days. None of the analysts consulted weeks ago by this means had predicted that the values ​​of the greenback could reach such low thresholds, since the majority pointed out that it would close the year around $3,900 and $4,000. Part of this would respond to the most recent decisions that macroeconomic authorities have made regarding interest rates, since although the United States Federal Reserve (FED) voted to maintain these rates, its forecasts for next year show Intentions to start trimming them. This translates into opportunities for a cheaper dollar against the Colombian peso, since the rule indicates that the more greenbacks circulate in the country, the cheaper it is. A reduction in interest rates would expand the possibility of foreign investments in the country, because credit becomes more accessible. In Colombia, the most recent board of the Bank of the Republic decided to begin the path of deceleration of rates, something that had not been seen since September 2021. These went from 13.25% to 13%. Although access to credit remains somewhat complicated, these winds of better conditions for financing in 2024 have been well received by investors, which could explain the decline that the dollar has had in recent days. 💰📈💱 Have you heard the latest economic news yet? We invite you to see them in El Espectador.