The markets in the region are concentrating their gazes on the dynamics of the dollar, the most commonly used foreign currency in the country, which continues in spite of low oil prices and the tariff war between the two largest global economic powers, the United States and China.
At the end of the day of this Monday The Market Representative Rate (TRM) closed at $ 3,240, with a rise of $ 17 versus the TRM with which it started the week that was $ 3,223.
The anticipated meeting between the presidents of the United States, Donald Trump, and China, Xi Jinping, where they will discuss about the commercial war and see if they are loosened or on the contrary tensions escalate. This meeting will draw up a roadmap for foreign investment in emerging countries, which are more exposed to risk.
On the other hand, the benchmark Brent of the day stood at US $ 60.64 and the WTI in US $ 51.90. Sebastián Salgado, the founding member of the Finanvalue services bank, indicated that the current low oil prices are being caused first by overproduction in the market.
For the stock exchange commissioner, the "abysmal drop" in the Brent and WTI benchmark prices is caused by the excess supply generated by countries such as Russia, Saudi Arabia and the United States, economies that increased stocks in oil reserves and caused adverse effects on the price.
On the negative correlation between the hydrocarbon and the American currency, Salgado said that this dynamic has been lost and that currently the fall in the price of one of the two variables does not directly influence the other.
"That is why the dollar is handling high prices compared to the 2,800 pesos it had as a value in mid-year, but it is not because of the fall in the price of oil because there is no such direct relationship between both assets," Salgado explained.
'Production must be lowered'
In November, hedge funds withdrew more than $ 12 billion from the oil market, a figure calculated based on a record decline of the long holdings of Brent and WTI.
The Organization of Petroleum Exporting Countries (Opep) estimates the possibility of reducing around 1.4 million barrels per day its combined production at a meeting, which would take place on December 6.
"Oil is no longer a benchmark against the dollar but if we see that the price is tied to the American economic activity. However, by mid-2014 the negative correlation between the two was 90%, which means that if the price of one rose from the other fell, now there is a positive correlation of 20%, so we are seeing that oil falls but has no effect on the currency, "Salgado explained.
The stock exchange commissioner warned that the problem with the price of oil is that the National Government estimated at $ 65 the average price of the barrel of oil, "this could damage the collection accounts and dividends of the hydrocarbon according to the terms of Ecopetrol," he indicated.
Ecopetrol has a cost center with a $ 35 oil, according to Salgado, however, the current situation may affect the profit margins of the company with regard to sales, accounts and national projections of revenue and budget for what Remainder of 2018 and beginnings of 2019.
To combat this current situation, it is speculated that at the next meeting of the Opep a concrete agreement can be reached and that it meets the needs of the market to cut oil production. "Overdelivery is a slowdown in the global economy," Salgado said.
The positive correlation between oil and the dollar meant that the price of the currency could fall, however, it is rising due to the shortage of foreign exchange in the market. "Foreign investors are taking the dollars of the Colombian economy, not because of the oil effect, but because of capital flight," Salgado explained.
Accentuated investors in Colombia are finding safer rates of return in the United States given the improvement of the US economy, bringing their capital to that country.
The improvement in investment rates in North America makes the emerging countries be hit, because "investors prefer the safest rates in the United States than those in countries such as Colombia where, despite being competitive rates, the risk is greater," he said the stock exchange commissioner.
Following the rise in the dollar, the Bank of the Republic took contingency measures looking into the future. Salgado emphasized that the entity activated a mechanism for buying foreign exchange through the export operation (PUT).
In this type of operation, the counterparty is authorized to sell dollars to the issuer. "The bank is accumulating reserves and drying the supply of dollars in the market to boost it becomes much more expensive," Salgado said.
This mechanism has generated pressures on the national economy over what currency refers to, Salgado emphasized that the rise in prices can generate inflation in the Colombian economy and damage the Bank of the Republic's plans in terms of monetary control.
According to the Financial Opinion Survey (EOF) of Fedesarrollo, the growth forecast for the fourth quarter of the year decreased from 2.9% to 2.8%. In addition, for 2019 also has a decrease of 3.3% to 3.2% in the annual figure.
For their share of the foreign exchange market, analysts plan that the exchange rate will be between $ 3,150 and $ 3,200, with $ 3,180 on average.
In addition, for the next three months, it expects to be located in a range between $ 3,090 and $ 3,200 with $ 3,150 as a median response, almost $ 150 above the projections of the previous month, where the average expectation was $ 3,005. The projection for 2019 also increased, from an average of $ 3,050 to $ 3,100.
Drafting Opinion and summary of agencies