October 18, 2024 (Globalinvestorideas.com Newswire) Globalinvestorideas.com, a go-to platform for big investing ideas releases market commentary from Quasar Elizundia, expert research strategist at Pepperstone.
“The Colombian peso has once again come under pressure, heading to close the week with losses against the U.S. dollar. Over the week, the Colombian currency has fallen close to its yearly lows, trading around 4.275 pesos per dollar, largely due to the drop in oil prices, one of Colombia’s key exports. This trend raises concerns about the country’s economic stability, as crude prices are crucial to its trade and fiscal balance.
The price of oil is on track to record its worst week of the year, affected by weak global demand projected for 2024 and 2025, along with economic uncertainty in China, the world’s largest crude importer. Despite a drop in U.S. crude inventories, other factors such as the lack of retaliatory attacks by Israel on Iranian energy targets and the ongoing economic uncertainty in China continue to impact oil demand. This combination of factors has significantly pressured oil prices downward, which directly affects the Colombian currency.
Domestically, the proposed tax and labor reforms have further heightened concerns over Colombia’s public finances, as they could increase costs for businesses and jeopardize economic growth. The reforms not only include tax hikes but also increased labor protections, which raises concerns in the private sector about their ability to sustain growth in an already challenging environment due to the drop in oil prices.
However, not all news is bad. Economic Activity (ISE) data for August is expected to be released today, and it is forecasted to show strong performance, which could generate optimism and limit the Colombian peso’s losses in the short term. In an environment marked by the volatility of commodity prices and uncertainty in domestic policies, local economic performance could offer some relief for the Colombian currency.”
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