Toady, after weeks of the Colombian peso strengthening as crude prices held high and the dollar taking an abrupt tumble amid market-moving comments by the U.S. treasury secretary, the Andean nation currency hit its strongest level against the greenback in more than two years.
The exchange rate swung sharply around 1 pm, according to currency exchange tracker XE.com, to a level of 2,812 pesos to the dollar — the strongest the currency has seen since hitting 2,799.5 to the dollar on November 3, 2015.
The peso had already been showing strength for much of the new year. Earlier this week, for example, on January 15, that exchange rate briefly hit 2,830 to the dollar, the strongest in almost a year and a half. But it moved even further today after a quote surfaced from U.S. Treasury Secretary Steven Mnuchin reportedly telling a a Bloomberg reporter during the World Economic Forum in Davos that “a weaker dollar is good for us as it relates to trade and opportunities.”
Though it may have represented something of a passing comment, some traders have taken this as a suggestion that the U.S. could be easing away from its traditional “strong dollar” policy in a push to chase President Donald Trump’s desire to cut trade deficits. Others have suggested, however, that the quote may have just been something of a vague statement that traders are reading too much into.
Mnuchin is scheduled to speak on a panel tomorrow in Davos, at 5 am Eastern Time, and the market is eager to hear his follow-up comments to clarify any potential change in Washington’s policy.
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Nevertheless, the dollar currency index (.DXY), which measures the U.S. currency against six other major currencies, fell by almost 1% Wednesday afternoon to a three-year low, according to Reuters. At the same time, crude prices climbed higher yet again after newly released data showed another drop of U.S. oil stockpiles.
In the wake of the news, Brent crude futures eclipsed the $70-USD-per-barrel mark midday on Wednesday to a three-year high of $70.55 USD. West Texas Intermediate crude futures spiked even more severely, by 1.8%, to hit $65.61 USD per barrel — a level not seen since December 5, 2014, per CNBC.
Naturally, the peso’s relative strength will remain subject to further ebbs and flows in the dollar and the price of crude in the days to come. But, at least for now, Colombia’s currency is enjoying a value it hasn’t seen in more than 26 months.
(Credit: Jared Wade)