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Brief COP analysis

There is much discussion on this in other threads, as a professional currency trader (among two other hats that I tend to wear) I have some insight on the marketing (seeing how I trade and make a habit of watching the live pips rather than just check Yahoo! from time to time). Nonetheless, for simplicity we'll use the Yahoo! board:

As others were kind to point out USD/COP has a gradual decline on the 5yr:

The 3mo however isn't so forgiving:

Weakening of USD is to blame for this, nearly all currencies are showing relative gains when compared to USD. With the U.S. remaining Colombia's largest source of investment (source: http://www.state.gov/r/pa/ei/bgn/35754.htm ) it is important to understand that foreign investors have to buy COP to acquire investments. This short term surge can be attributed to a surge in foreign investment due to uncertainty in other economies. To properly gauge Colombia's economy we must evaluate the "real" value of COP by comparing it to other currencies:

EUR/COP:

AUD/COP:

GBP/COP:

The intent of this counterpoint is not to argue that the COP has not shown growth but to caution investors of volatility and to keep your eyes peeled for a reversal.

By deathnova on Mar 23, 2008, 10:50 in Friendly Talkzone.

jorgegdiaz says on Mar 23, 2008, 11:21:

Very interesting post; in common mortal words.

In the last year, COP devaluated against ϵ but gained value compared to the £. May it be due to a different trade balance?

Could you provide same charts againts the Bolivar ?

Just this morning El Tiempo published an analysis on why the US recession. Everything that goes up has to go down (Smith´s economy cycle ). As soon as the houses bubble finishes deflating another sector will pick up US economy.

We´re keeping dolars untouched and living on COP for now.

Man with hole in pocket feel cocky all day.

Frank Rizzo says on Mar 23, 2008, 11:34:

I don't know about all these charts.....but I do know...that I purchase way, way less stuff in Colombia....for the weak dollar...and I buy all the stuff in the US and ship it down now... I don't even have stuff priced out down there anymore....as usually the price is the same for me to buy and ship...EXCEPT..the quality is usually double what you can even buy in Colombia.....

vicshere says on Mar 23, 2008, 11:40:

international secret agent man is back....opps now a professional currency trader

listo

deathnova says on Mar 23, 2008, 11:55:

Frank,

That's a lay yet accurate way of putting it. COP has shown gradual improvements while USD has been severely weakened by events of the past year to year and a half. Like jorgediaz said, the housing sector needs to hit it's reversal point before the situation will get any better.

vicshere,

I thought I made it clear that I owned two companies?

Gator says on Mar 23, 2008, 12:40:

Jorgegdiaz said, " We´re keeping dolars untouched and living on COP for now."

Exactly what we are doing. It has been some time since we went to dollars. What goes down, over the long run, goes up.

"Brevior Sltare Cum Deformibus Mulieribus Est Vita!" .

Saltador says on Mar 23, 2008, 13:21:

I hope also to see a rebound. I don't see how a weak dollar won't be a negative overall for colombia.
Frank, how do you ship your items to colombia? I don't mean to hijack this thread, but this is of importance to me. I will be attempting to furnish an apartment in colombia in about a year and would like to buy some items here in the US and ship them over.

Frank Rizzo says on Mar 23, 2008, 13:28:

Air ship...from Miami...it ain't cheap..but it gets there..

Saltador says on Mar 23, 2008, 16:17:

Frank,
Any details? Name of company, cost per pound, contact info, logistics, weight limits?

Frank Rizzo says on Mar 23, 2008, 16:22:

We use JJ Logistics out of Miami....about $2.50 / lb..door to door...305-805-8300 (raphael)...

gringoloid says on Mar 23, 2008, 16:37:

FR........isn't there a tax along with this?

I've never been able to get them on the phone........just rings and rings.

Frank Rizzo says on Mar 23, 2008, 17:03:

Hi GL...PM me and i'll give you his cell...... he can give you all the details...

arthur brode says on Mar 24, 2008, 07:50:

GL

the tax is included in the $2.50/lb rate =13,000 pesos per kilo

http://www.calirentals.net/

jonas says on Mar 24, 2008, 09:38:

sorry but the yahoo charts are so poor. We should start using FX charts here.
The Euro for example has not seen the 3100 COP ceiling as shown on yahoo.

What I have, I do not want to lose, but Where I am I do not want to stay, but those I love, I do not want to leave, but those I know I no longer want to see, but Where I die, I do not want to go;I want to stay where I have never been

Saltador says on Mar 24, 2008, 11:27:

Dollar holding strong today around 1820.

Alma del Norte says on Mar 24, 2008, 14:20:

I find most of this stuff baffling. When I have tried to learn about financial speculation, I just get bored within a few minutes. I have a very short attention span.

Would anyone be willing to comment on how the £, (GBP, Sterling), is all tied into this and how predicted outcome for the $ will potentially effect UK source income/capital. I thought initially that we were following the $, but why would that be when we are probably closer, economically, to the Euro? Or, is the £ just out there on its own. What future events might possibly effect the £/COP exchange rate?

I seem to remember that about 3 years ago I could get about 4,500 COP for a quid. Now what am I looking at? - 3,600 - 3,700.

Sorry if this is all a bit basic to you financial wizards, but I saw an opportunity here to have it explained to me in lay-person's terms.

Ta.

La vida es una rutina

jorgegdiaz says on Mar 24, 2008, 14:26:

Layman terms ALMA:

Image and video hosting by TinyPic

Man with hole in pocket feel cocky all day.

Alma del Norte says on Mar 24, 2008, 14:30:

Yeah, thanks georgy, that's pretty much equivalent to the attention I can span.

La vida es una rutina

pedro says on Mar 24, 2008, 14:37:

Alma, the general buzz in the financial press is that the UK is due for a financial kick in the nuts due to overvalued housing.

In this instance, the UK tracks more closely to the US due to liberalised mortgages, explosion of investment property purchases, speculation etc.

What happens is that people have a large % of their net worth attributable to the property they own. When those values are falling, people don't feel as rich any more.

When you look at the country's wealth as the aggregrate of all its citizens' wealth. All of a sudden, that wealth is diminishing as housing valuations keep falling.

que nota!

jorgegdiaz says on Mar 24, 2008, 14:40:

Sorry, couldn´t resist posting the image...

http://www.newsweek.com/id/128538

Pretty good explanation there

Man with hole in pocket feel cocky all day.

Ctg Bound says on Mar 24, 2008, 14:59:

Alma del Norte,

I doubt much will happen to the UK overall, other than a bit slower growth this year.

The dollar is still over valued against sterling.

As to the Peso, it will probably carry on going up against the pound for a while, although I expect regular knockbacks.

Those are my views.