Comment on the Relationship between Wall Street and the Colombian Peso

jh816 says on Feb 29, 2008, 14:22:

Be careful, there is almost certainly a correlation between equity prices in New York and the peso, but there is no causation arguement. The peso/dollar rate fluctuates because of the relative differences in the economies, economic growth, inflation, and interest rates of the two countries not because the market is 'up' or 'down' a particular day.

The correlation is because the market for both assets (exchange rates and stocks) are tied to the afforementioned factors (the market takes its cues mostly from the general economy). The reason you may notice that when New York is 'down' the dollar is up relative to the peso is because "usually" when there is economic fear on Wall Street, there is greater economic fear in the rest of the world (shown by the world equity markets falling a greater percentage than in New York). When this happens, people move their investments to "safer" areas (i.e. United States assets and currency) hence increasing demand (strengthening) for the dollar and weakening demand for the peso.

This has not necessarily been the case recently because even as Wall Street (the U.S. economy) falls, Colombia is expected to grow.

jonas says on Feb 29, 2008, 14:29:

jh, stunning explanation! Thank you.

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

gringoloid says on Feb 29, 2008, 14:55:

I've wondered about the peso relationship also, but only around the first of the month.

Does anyone have access to the day to day charts? There must be a lot of checks of all kinds being transferred around the first of the month, does the peso get a little stronger around the first? I dunno but I'd like to check it out.

wouldn't surprise me if there was something fishy goin on.

sloopskipper says on Feb 29, 2008, 16:00:

expatriate says on Feb 29, 2008, 16:23:

http://finance.yahoo.com/currency/convert?from=USD&to=COP&amt=1&t=5d

Day to day chart.

sloopskipper says on Feb 29, 2008, 16:32:

I seems that gringoloid was curious about the first day of the months, and I don't see any real pattern.

gringoloid says on Feb 29, 2008, 17:38:

I certainly see a pattern.......10 out of the last 12 months the peso was worth more the week before than on the first. and if you look over the years, there are many small spikes right around the first in favor of the peso. sometimes is just levels off at that time. very few times does it spike in favor of the dollar.

but this chart does not show small amounts..................i was only talking a few pesos here, which these graphs don't show. i would imagine there are hundreds of thousands of checks worth hundreds of millions of dollars more than other times of the month................this is only a guess, i really don't know................but 100 pesos, about a dime, really adds up.

sloopskipper says on Feb 29, 2008, 17:43:

I think that you can use the link that expatriot shows and produce a chart for any time period, at least looking backwards from today.

But there are many other resources, also.

gringoloid says on Feb 29, 2008, 17:47:

i mean 200 pesos above.

what i'm going to do is keep track of this on the last few days and first few days of the month and make my own chart to the 'hundredths'.

in my case, my pension check comes in on the last thursday of the month.

bill, when do social security checks come in?

sloopskipper says on Feb 29, 2008, 17:53:

It depends, my ss is deposited the 4th Wednesday, I think. Pension and SEPP distribution the last business day of the month.

sloopskipper says on Feb 29, 2008, 17:57:

But there could be many factors to cause a little blip at month-end.

sloopskipper says on Feb 29, 2008, 17:59:

gringoloid, please tell me that you don't wait for a paper check and worry about the hundredths.

rocinante says on Feb 29, 2008, 18:59:

Excellent jh816!

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

christobeldawg says on Feb 29, 2008, 20:20:

what is the atm exchange rate in Bogota right now? anybody know? gracias

admittedly, arriving can feel great too

gringoloid says on Mar 1, 2008, 06:36:

.................i have a peso/dollar gadget always on my screen.

right now, 9:30am Bogota time, it says 1835.500

i'm going to monitor this 5 days before and after the first of the month to see if it may be better to do conversions on say, the 20th.

i know its a negligible difference; i'm speaking on a macro level and not a micro level. but for individuals who collect their pensions here in colombia, it may add up to something over a few years.

ok, so i'll report my findings every month.

rocinante says on Mar 1, 2008, 07:09:

ATM exchange rate is determined by your bank where the ATM draws against - in the US or another country - not by Bogotá. It varries greatly when you factor in fees and stuff. Some banks use the following day's rate and adjust the withdrawl amount. Some may take same day opening or next day closing and pick the better rate for the bank. It all adds up.

"World economic indicators point to a democrat winning 2008. It will surely be Obama. Peso 1400 by November" Feb 5, 2008

Bill Turley says on Mar 1, 2008, 08:31:

Hi all
My SSA check is direct deposited in Banco de Bogota and usually is available on the 5th. Generally SS checks are to be delivered on the 3rd in the USA so this corelates. I also get a paper check which is mailed the last working day of the month. This does give me a little flexibility in cashing it by day and bank.

Mr. Bill Somondoco