Value of the Colombian peso in world markets
Just as things have value, the currencies used in different areas of the world also have a value. “El cambio de valor de una moneda, dependiendo de si éste aumenta o disminuye en comparación con otras monedas extranjeras, se denomina revaluación o devaluación respectivamente. La revaluación ocurre cuando una moneda de un país aumenta su valor en comparación con otras monedas extranjeras, mientras que la devaluación ocurre cuando la moneda de un país reduce su valor en comparación con otras monedas extranjeras, razón por la cual el concepto de devaluación es completamente opuesto al de revaluación”. (Devalución, s.f.)
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Therefore, the value of the Colombian peso is given by the representative exchange rate of the market (TRM). This is the amount of Colombian pesos that are received for each US dollar and is calculated taking into account “las operaciones de compra y venta de divisas entre intermediarios financieros que transan en el mercado cambiario colombiano, con cumplimiento el mismo día cuando se realiza la negociación de las divisas.” (Tasa de cambio del peso colombiano (TRM), s.f.)
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Below there is the figure of the history of the Colombian peso over the last 5 years against the dollar, which is the most representative currency and the principal worldwide.
In the previous figure the horizontal axis shows the variation in years and the vertical axis shows the variation of the Colombian peso against the dollar. Thus, it is observed a prolonged increase in the value of the Colombian peso since 2015 against the dollar, and a stable trend of approximately 3000 pesos at the end of 2016 and early 2017.
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The importance of knowing the value of the currency of the countries in comparison with other countries lies in the fact that from it, it is known how many pesos can be bought or sold for every dollar bought or sold. In this way, as mentioned above and taking into account what is observed in the graph the dollar has gained strength in the market, which means that it has been revalued regarding other currencies, while the peso has lost strength in the market which means it has devalued against the dollar. Thus, these changes in the values ​​of the currencies have a great importance. To explain this even better we are going to give an example. The companies that sell products abroad, companies in charge of the export of goods and Products, abroad other companies pay these products in dollars, since the dollar is the currency in which most of the businesses are carried out internationally. Exporters, when exchanging those dollars for pesos, will obtain more pesos for each dollar sold due to the exchange value; this will increases their profits significantly and will encourage the producer to export more goods competitively abroad. However, for an importer it quite different due to the fact that when it comes to change the dollar into pesos, they will get less dollars for each peso, which means that their profits are reduced and product prices become higher.
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Thus, the TRM on Thursday, February 9, 2017 was $ 2,879.49 Colombian pesos per each US dollar
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