Dollar Down against the Colombian Peso

[El Diablo]

I'm not sure what's up but the dollar lost about 4% to the Colombian peso in the last day or two and now sits at 2550 instead of the 2670 it was at earlier in the week.  

El Diablo

[Kit]

... in response to Dollar Down against the Colombian Peso, posted by El Diablo on Aug 9, 2002

Well all (convertible) currencies fluctuate around each other and 4% change is a norm. The reason for that is sheer speculation and has little to do with the economy. Currency traders setup a pace for it. May be there was an explosion in Bogota, may be it is an impending war in Iraq, who knows. In a long term peso will continue its slide though.

[NW Jim]

... in response to Re: Dollar Down against the Colombian Pe..., posted by Kit on Aug 9, 2002

The Peso was probably declining in anticipation of the increased warfare that is expected by the installation of President Uribe. He has been sworn-in, obviously there was some violence that day, but the country went on. The Iraq situation probably also impacts, due to Colombia's oil production. Sell on the rumor(speculation) and buy when the non-event occurs. Long term you're right it's likely to continue to slide, most of SA looks shaky right now.

[El Diablo]

... in response to Re: Dollar Down against the Colombian Pe..., posted by Kit on Aug 9, 2002


I just thought it was an interesting departure from a trend that had seen the peso lose about 15% of it's value against a very weak dollar in less than 3 months.  Against the stronger Euro there was almost a 30 percent decline for the peso.   Prior to May the peso had been pretty stable against the dollar at about 2300.    

Anyway, I don't understand all this currency arbitrage stuff but I'm wondering if todays big reversal is out of some kind of response from the Colombian banking system....

El Diablo

[Pete E]

... in response to Dollar Down against the Colombian Peso, posted by El Diablo on Aug 9, 2002

ED,
I don't know why the peso is down or bounced recently,but I have a better idea about the dollar,which I think will regain strength and with a peso probably in a long decline the peso/dollar will increase alot more I think.
The dollar has been strong untill recently because the US was considered a good place to invest.The stock market continiued to decline,making it a worse investment,money moved to bonds lowering interest rates and making them less
attractive to foriegn investors also,so a flight of money from the US lowering the dollar.This will turn around,and I think fairly soon,but I have been wrong before,about $50,000 worth, about thinking the stock market was at a bottom.Wish I had that money to buy now.Barring bad news I think we have now seen the bottom and the market will recover,money will move from bonds to stocks and both stocks and bonds will again become more attractive to foriegn investors.The dollar will rebound,perhaps strongly.
I think this will definetly happen,the question is when and I think soon,although it may be a long slow recovery instead of a sharp recovery,which is a possibility though.
So,bottom line,long term the peso continues to decline against the dollar unless something turns around with Colombia.In the short term the peso may recover some more before the dollar situation takes over.
But hey,were going to spend money there anyway,right?But if the peso gets alot weaker I may start looking harder at real estate in Colombia.Things will probably get alot worse before they get better but if Uribe and his succesors take a firm and consistant stance I believe Colombia can have some much better times ahead.
I am fantasizing about beach property,Cartegena-Santa Marta area.Maybe a  vacation cottage type resort.Even if we didn't live there full time visits could become tax advantages.I can visualise looking at it from my lounge chair.But I'm way out ahead here.We will see.

Pete