Analysis: Chilean, Peruvian and Brazilian currencies gain against the Colombian peso

RIO DE JANEIRO, BRAZIL – The conflict between Russia and Ukraine’s high oil and commodity prices have led to changes in the markets that have been reflected in the appreciation of several currencies, especially those of countries that derive a large part of their revenues from the export of these products, such as Colombia, Peru, Chile, and Brazil.

However, the Colombian peso is beginning to change its tendency and is not in such an advantageous position as its competitors in the region. Furthermore, it still has to endure a period of uncertainty prolonged by the political competition in the presidential election campaign.

For José Ignacio López, director of the Economic Research Department of Corficolombiana, at the global level, there is the strength of the dollar against its competitors. Some currencies of emerging countries have gained value, related to the fact that Russia is not a worthwhile investment destination. After the liquidation of resources, the appetite for countries with favorable exposure to raw materials has increased.

He points out that the uncertainty in Colombia could lead to a reversal of the situation of the peso, which has seen an appreciation of 6.14% this year and depreciation of 7.39% last year.

Due to the strong geopolitical tensions in Europe, the euro has been falling very sharply for several weeks, to levels similar to those seen during the Greek debt crisis, says Ana Vera, chief economist at Inon Capital.

And in this sense, international investors are looking for currencies that are not so expensive and provide access to sources of financing that are not so expensive, and this is happening mainly with the currencies of Brazil, Peru, and Chile, and warned that with the Colombian peso, uncertainty is increasing, especially from a political point of view.

He added that Peru and Chile have an advantage because their presidents, considered anti-market, are already in office, “but they are taking a more market-friendly position and are favored by that.”

In addition, except Colombia, the countries above would be better able to take advantage of the higher foreign exchange earnings from the high prices of their commodities.

For Diego Gómez, a stock market specialist at Corficolombiana, there was a bonanza in crude oil prices in the first five years of the last decade that was better exploited than now.

He points out that its use would be vital to reducing the current account deficit, which exceeds 5.5% of GDP.

With information from portafolio.co