The Colombian peso has continued to lose value against the US dollar, with economists blaming the drop on the rising inflation and the minimum wage hike in the country.
The peso lost a staggering 16% against the greenback in 2021, despite high prices for petroleum goods in the global marketplace.
In the meantime, a survey of analysts conducted by Reuters blamed the increase in the minimum wage on inflation in the country.
The peso will likely go down further at least until May when Colombians go to the polls to elect their next president. A possible victory for left-wing candidates is also a reason driving investors to sell Colombian assets.
Politics was the reason behind the currency devaluation in Chile and Peru as well. Chile elected Gabriel Boric, a socialist leader, as its new president in a recently held election.
The Chilean peso lost as many as 17% last year, despite the price of copper, the country’s main commodity export, soaring all through the year.
Both Chile and Peru raised interest rates, but their currencies continued to lose shine in the face of the American dollar.
The weak currency gives an overview of the extent of damage the COVID-19 pandemic caused to the region’s economy.
Latin America has almost come out of the pandemic, but the region’s economies may take many more years to recover from the shock, stated The Financial Times in a recent report.