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Petro’s success • La Nación

The fact that the dollar has fluctuated in the last week seems like a reason to celebrate, and it is not for less, after several consecutive periods of a TRM marking the $4,500 barrier, it is a breather for everyone; government, businesses and families. But it is worth taking a look at the situation of the new trend that marks the price of the currency.

The first thing that must be highlighted is that it is not an achievement of the Government’s management, since behind it there are several factors of the global situation that have influenced the behavior of the US currency, likewise, it is the product of corrections on the valuations in the markets, which marked a break in their trend with the electoral result of the contest for the Presidency and Congress, from which moment they generated a kind of panic, with the consequence of a greater appetite for assets abroad in the desire to a good part of the population to look for store-of-value goods (“Fly to Safety”), a situation that prompted the TRM during the second quarter of 2022 and the elapsed time of this term.

Second, the proposal of Brazil and China, mainly to reduce dependence on the dollar for foreign trade operations, financing, among others, show a lower demand for the currency in the long term, which suggests an impact in terms of demand. As indicated, up to now it is only an initiative that will surely be able to materialize with the intervention of Xi Jinping, who has openly stated a position of disassociating himself from Washington with the purpose of consolidating himself as a new actor with greater predominance in global geopolitics.

No less important, the discussion about the debt ceiling in the United States, although a preliminary agreement was reached, does not stop worrying that the discussion in each government, first Trump and now Biden, about the maximum level of indebtedness to finance the operation. This situation marks a clear weakness before the world so that the country can continue with that role of economic power, causing a good part of the capital invested in the North American country to migrate towards emerging destinations with aspirations for greater profitability.

Finally, the scandals within the government seem to have weakened the political capital to advance more radical reforms, forcing negotiations with independent parties, opposition parties, and even moderate sectors that are part of the coalition.

As evidenced, the temporary triumph of a decrease in the devaluation of the Colombian peso cannot be attributed to Petro’s management, since to date it has not obtained the first early victory that justifies it. In reality, they are temporary factors that have helped to calm the tense economic waters, but if we take a look from the fundamentals such as GDP, trade balance, inflation, among other variables that we will analyze in the next column, the data would not be so encouraging for the years to come.

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