Colombia: Peso weakens in February amid sell-off in emerging markets
February 12, 2014
On 10 February, the Colombian peso (COP) traded at 2,050 per USD, which was 6.5% weaker than it was on the same day of the previous month. The figure marked the COP's lowest value against the U.S. dollar since December 2009. On an annual basis, this represents a loss of 14.8% against the U.S. dollar.
The peso has been depreciating since early 2013 when the Central Bank and the government took additional steps to weaken the currency in order to protect the country's export sector. However, devaluation in recent weeks is being pushed by a sell-off in emerging markets that followed the U.S. Federal Reserve's announcement that it would wind down its monetary stimulus policies. That said, Colombia is in a more comfortable position than its regional peers, as inflation remains well below target. In addition, the devaluation will likely spur exports of commodities and manufacturing goods.
Economists polled by LatinFocus Consensus Forecast expect the peso to trade at 1,971 COP per USD by the end of the year. For 2015, the panel projects that the Colombian currency will close the year at 2,024 COP per USD.