Colombia: Colombian peso plunges to over-five-year low on tumbling oil prices
January 14, 2015
The Colombian peso (COP) depreciated against the U.S. dollar in January, continuing the trend that has been in place since July last year. On 6 January, the currency traded at 2,449 COP per USD, the weakest value since 2009. This was 5.6% weaker than the level recorded on the same day in December 2014. In annual terms, the Colombian peso lost 26.4% against the U.S. dollar. In the following days, the peso appreciated just slightly. On 13 January, it traded at 2,417 COP per USD.
The Colombian peso weakened against the U.S. dollar as falling oil prices dampen the growth prospects for petroleum-producing countries. The plummeting oil price is putting Colombia’s fiscal position under pressure. Oil accounts for the largest portion of the country’s exports and for a notable part of government revenues. In addition, oil exports are Colombia’s most important source of foreign exchange. While in previous months Finance Minister Mauricio Cárdenas had noted that the weaker Colombian peso could help to mitigate the impact of lower oil revenue by boosting exports in other industries, more recently Cárdenas expressed concern about the speed of the devaluation, which sparked rumors that the Central Bank might intervene to slow depreciation.