Colombia: Colombian peso declines to multi-year low at the end of August
August 26, 2015
The Colombian peso (COP) has been depreciating rapidly since the second half of May 2015. On 26 August, the currency hit a multi-year low of 3,262 COP per USD amid significant volatility in emerging markets following the surprise depreciation of the Chinese yuan on 24 August. The reading was 14.3% lower than the value tallied on the same day of the previous month and 68.8% weaker compared to the same day of last year. The peso rapidly regained some ground following the spike and stabilized around 3100 COP per USD in the first half of September.
The peso has followed a largely depreciative trend since the second half of 2014, with the exception of a short but sharp appreciation in the beginning of 2015. This trend results mostly from the persisting low oil prices that are weighing on Colombia’s growth prospects. Indeed, oil accounts for over 50% of Colombia’s exports and about 20% of the government budget comes from oil revenues. In addition to tumbling oil prices, uncertainty regarding the Chinese economy and important volatility in China’s stock market in recent months exacerbated the trend.
Author: Eric Denis , Economist