After several weeks of Colombian peso appreciation against the dollar, the Central Bank of Colombia has announced for the second time that it is keeping the interest rate at 13.25%. At the same time, it has been reported that unemployment in the country has fallen to 9.3% for the month of June, the first time it has dropped below double digits since 2022. These are good economic indicators for Colombia.
Continuous peso appreciation
When the dollar surpassed the 5000-peso mark in early November 2022, the country was greatly concerned. Never before had the national currency experienced such a significant devaluation against the US dollar. After some ups and downs, the currency stabilized above 4,900 pesos.
The recovery of the peso is now a reality, and currently, the dollar is trading around 3,900 pesos. Experts have pointed to various reasons, but they all agree that investor confidence has been restored. In the last two months, foreign capital inflows into Colombia have significantly increased. Difficulties for the government in advancing social reforms, as well as doubts about the options to avoid new oil explorations, seem to be calming the foreign market.
Stable interest rate
After almost two years of rising Colombian and global inflation, the response from the Central Bank of Colombia was to start a considerable increase in interest rates. They went from 2% in October 2021 to 13.25%, set in May of this year. In the two subsequent reviews, the Central Bank has decided to maintain the rates at that percentage. It remains high, but the fact that it is not continuing to rise seems to mark a turning point.
Both President Petro’s government and the Central Bank share this view because although inflation remains very high, experts predict it will be around 9.2% by the end of the year. The objective of reducing the CPI seems to be slowly but steadily being achieved.
Good unemployment figures
Finally, the unemployment rate stood at 9.3% in June of this year, two points lower than in the same month of 2022, as reported by DANE. Although informality rates remain very high, this June figure is the first to fall below 10% in the last nine months.
The gender gap in unemployment remains at 3.9%, the lowest figure since 2014. The cities with the highest unemployment rates are Quibdó, at 26.7%, and Ibagué, at 16.1%. On the other hand, the capital cities with the lowest rates were Bucaramanga, at 8.1%, and Santa Marta, at 8.7%.