http://www.theforexnittygritty.com/forex/trading-the-colombian-peso
Trading the Colombian Peso
The Colombian peso was the success story of 2012 when it out performed all other currencies against the US dollar. These last few months trading the Colombian peso has been a matter of staying ahead of losses as the fall of the peso has mimicked the fall of the ruble and Russian recession. In each case the major problem is the fall in the price of crude oil. Bloomberg notes that the Colombian peso leads global losers due to dropping oil prices.
Colombia’s peso fell to a five-year low and led losses among world currencies as the price of crude oil, the Andean nation’s biggest export, sank to a five-year low.
The peso sank 2 percent to 2,396.69 per dollar at the close in Bogota, the weakest since April 2009. The drop was the biggest among 31 major currencies tracked by Bloomberg. The peso has tumbled 12 percent in the past month.
The peso has fallen dramatically from the 2000 peso to a dollar range to the 2400 peso to the dollar range. In trading the Colombian peso what can we expect?
Oil Prices
Traders trade oil futures and not oil. Although prices of oil have fallen they are fluctuating up and down. CNBC notes:
Oil futures rose more than a dollar and Brent hit a session high after the U.S. Commerce Department revised its estimate for third quarter GDP growth to 5 percent, a greater leap than expected.
That is the fastest pace in 11 years and up from the previous estimate, which saw the U.S. economy growing 3 percent. Analysts had anticipated the Commerce Department to revise its reading up to 4.3 percent.
A stronger US economy will help keep the price of oil from falling further. However, Japan is going into a recession with Europe possible not far behind. China is experiencing slower growth and will no longer see yearly ten percent increases in its GDP. In trading the Colombian peso one’s eyes need not be on Colombia but on the global economy and demand for oil versus supply boosted by fracking technology and OPEC production. There is, however, one exception.
Peace in Colombia
Peace talks have been going on for two years in Havana between the Colombian government and the largest rebel group in a sixty year long civil war. FARC, the large rebel group, has just called a unilateral ceasefire. There are many issues to deal with but if the government and rebels can iron out an agreement it will be a boost to the Colombian economy in many ways. Reuters notes the conditional unlimited ceasefire.
Colombia’s Marxist FARC rebels have declared an indefinite unilateral ceasefire beginning on Dec. 20 but promised to call it off if they come under attack by government forces, the group said on its website on Wednesday.
Gains could well be seen in trading the Colombian peso if true peace breaks out and resources are diverted to the economy and not warfare.
2. The Colombian peso was the
success story of 2012 when it out
performed all other currencies
against the US dollar.
3. These last few months trading the
Colombian peso has been a
matter of staying ahead of losses
as the fall of the peso has
mimicked the fall of the ruble
and Russian recession.
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5. In each case the major problem is
the fall in the price of crude oil.
7. Colombia’s peso fell to a five-year
low and led losses among world
currencies as the price of crude
oil, the Andean nation’s biggest
export, sank to a five-year low.
8. The peso sank 2 percent to
2,396.69 per dollar at the close in
Bogota, the weakest since April
2009.
9. The drop was the biggest among
31 major currencies tracked by
Bloomberg.
10. The peso has tumbled 12 percent
in the past month.
11. The peso has fallen dramatically
from the 2000 peso to a dollar
range to the 2400 peso to the
dollar range.
15. Although prices of oil have fallen
they are fluctuating up and down.
CNBC notes:
16. Oil futures rose more than a dollar
and Brent hit a session high after
the U.S. Commerce Department
revised its estimate for third
quarter GDP growth to 5 percent,
a greater leap than expected.
17. That is the fastest pace in 11
years and up from the previous
estimate, which saw the U.S.
economy growing 3 percent.
19. A stronger US economy will help
keep the price of oil from falling
further.
20. However, Japan is going into a
recession with Europe possible not
far behind.
21. China is experiencing slower
growth and will no longer see
yearly ten percent increases in its
GDP.
22. In trading the Colombian peso
one’s eyes need not be on
Colombia but on the global
economy and demand for oil
versus supply boosted by fracking
technology and OPEC production.
25. Peace talks have been going on
for two years in Havana between
the Colombian government and
the largest rebel group in a sixty
year long civil war.
26. FARC, the large rebel group, has
just called a unilateral ceasefire.
27. There are many issues to deal with
but if the government and rebels
can iron out an agreement it will
be a boost to the Colombian
economy in many ways.
29. Colombia’s Marxist FARC rebels
have declared an indefinite
unilateral ceasefire beginning on
Dec. 20 but promised to call it off
if they come under attack by
government forces, the group said
on its website on Wednesday.
30. Gains could well be seen in
trading the Colombian peso if true
peace breaks out and resources
are diverted to the economy and
not warfare.
31. Over the last several years the
Colombian peso has ranged from
2400 to the dollar to 1600 to the
dollar.
32. If peace breaks out and If peace
breaks out and If peace breaks out
and If peace breaks out and oil
prices rise as well.
