After months of a clearly rising dollar, the appreciation of the peso against the US currency in recent weeks has facilitated a 30% increase in international tourism for Colombians.
During November and December 2022, the US dollar reached a record high of over 5000 Colombian pesos. It was the highest level ever experienced, and it had a significant impact on the national economy: an increase in prices of technology and imported products and an impoverishment of the population, as their currency was devalued.
Six months of recovery
Since February, the value of the dollar has been steadily falling. However, it has been during July that the recovery of the Colombian peso has consolidated more sharply, reaching an average value of 3,975 pesos per dollar.
Although the value is still high compared to other currencies in the region and the average of the Colombian peso in recent years, the current value opens a window of opportunity that is already being seen, for example, in the increase in international trips by Colombians.
International tourism grew by 30%
According to a study by Viajes Falabella, international travel for tourism purposes has grown by 30%. Daniel Figueroa, Commercial Manager for Colombia at Viajes Falabella, pointed out that “we have seen a change in bookings from Colombia, with a significant growth in reservations to various destinations, such as Panama with a 30% increase, the United States with 23%, and Europe with 17%”.
Technology also benefits
Another sector that is also benefiting from the peso’s recovery is technology. According to Édgar Jiménez, finance professor at Jorge Tadeo Lozano University, “durable assets such as appliances, all of this can start to have good price levels.” However, Jiménez pointed out that “we still have to wait because current inventories may have been negotiated at a higher rate by the end of the year.”
The government takes credit
Meanwhile, the Minister of Finance, Ricardo Bonilla, has taken the opportunity to link the improvement in the peso’s situation to the fiscal reforms approved by the government. Bonilla explained that the peso is returning to the position it had before the Covid-19 pandemic. It was the moment when an escalation began, which has not stopped rising since then, reaching its all-time high at the end of last year.
Bonilla does not expect strong variations, either upward or downward, of the dollar until the end of the year. On the contrary, according to the top official of the Colombian finances, the stabilization of the exchange rate between both currencies will be the trend in the second half of 2023.