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Colombian Peso Falls amid Sluggish Economic Releases

David Meyer

South African Rand Rose, Colombian Peso Fell, US Dollar Is Steady

(Continued from Prior Part)

Colombian peso declines on economic data

The Colombian Peso fell against the US dollar on November 18, 2015, on the back of slow growth in retail sales and industrial production in the month of September. Colombia is heavily dependent on global prices of crude oil since it’s a major share of the economy’s export turnover. So crude oil prices have a high correlation with the Colombian peso.

Crude oil prices were under significant pressure in the week ended November 13, 2015, which caused weak trading in the Colombian peso. Speculations that the US Federal Reserve will increase interest rates in December has also been weighing on the Latin American currency.

Industrial production, retail sales release below forecasts

Industrial production on a YoY (year-over-year) basis grew by 2.0% in September, below consensus forecasts of a 2.2% growth and the previous month’s increase of 2.6%. Retail sales YoY rose 2.8% in September, much below the previous month’s increase of 5.4% and expectations of a 3.5% growth. On the other hand, consumer confidence increased to 6.8% in October from 4.3% in September.

Impact on the market

Latin American ETFs were trading positive on November 18, 2015. The iShares Latin America 40 ETF (ILF) and the Global X MSCI Colombia ETF (GXG) rose 2.0% and 1.1%, respectively.

American Depositary Receipts (or ADRs) in Colombia were trading at a mixed note following the macroeconomic data releases. Petroleum multinational Ecopetrol (EC) rose 1.6%, and BanColombia (CIB) ended higher at 0.30%. Grupo Aval (AVAL) ended on an negative note of 1.1%.

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