Collapsing oil prices push Colombian peso to record low

For years, the value of the Colombian peso has risen and fallen with the price of oil. However, for the last year and a half, both have done nothing but fall. Last week, the Colombian peso reached a record low of 3,339.60 COP to 1 USD. Unsurprisingly, oil prices dropped by as much as 6% after six straight days of decline.

The International Energy Agency warned that the global glut in supply would last at least until the end of next year, as international demand is slowing and OPEC shows no interest in cutting production. As German Cristncho, the head analyst at Corredores Davivienda told Bloomberg, when it comes to the value of the Colombian peso, “It’s all about oil.”

In other Colombian Financial News, Cesar Vallejo, co-director of the Colombian Central Bank indicated that the country might need to raise interest rates in order to slow rising inflation and to cut the country’s current account deficit. Vallejo explained in an interview that, “A few months ago, some were worried that monetary policy could produce an excessive deceleration. The worry now, more than the economy’s deceleration, is the current account deficit.”

Lastly, Colombian state-owned oil company Ecopetrol announced a reduced oil production target for 2015 due to the company’s significant reduction in its investment budget brought on by the collapse in global oil prices. As recently as September, Ecopetrol had planned to invest $6.7 billion for 2016, but on Monday, that plan was revised down to just $4.8 billion, 40% below the investment level in 2015.