Ensayo sobre tasas de cambio en colombia

COLOMBIAN EXCHANGE RATE TRENDS IN 2012
By Darío Rey
This paper pretends to foresee the behavior of exchange rate in Colombia by the end of 2012, based on two theories (Model of Supply and Demandand Principle of Purchase Power Parity), even though these two theories may be seen quite simple and will not be able to let us predict the exchange rate by the end of current year, will surely allow usto anticipate somehow whether the expectations of exchange rate will be focused either on devaluation or revaluation, taking into account a ceteris paribus scenario and leaving aside some othervariables such as interest rates, unemployment, GDP, among others. In order to do this, it is necessary to analyze the information regarding average colombian exchange rate for previous years, inflationrates of both countries, as well as import and export volumes in Colombia, as follows:
Exchange rate | Inflation rate | Colombia (USD million) |
Year | Average (cop/usd) | Colombia | USA | Exports| Imports |
2009 | 2,156.29 | 2% | -0,34% | 32,853 | 32,897 |
2010 | 1,897.89 | 3,17% | 1,64% | 39,819 | 40,682 |
2011 | 1,848.17 | 3,73% | 3,16% | 51,179 | 50,170 |

According to this datawe can see really important things about the behavior of the economy in Colombia and United States. First, we see a revaluation of our exchange rate within the last three years, which obviously hasbeen the result of foreign investments and the boom of crude oil exports, this fact has increase the amount of dollars in our economy causing our currency to appreciate, though, on the other hand thisraise in the exports has created a confidence in consumers, hence more productivity usually means higher salaries and more money to spend, and this money supply in the economy has yield the inflationwe have noted. Furthermore, when comparing inflation rates for Colombia and USA, we realize that US has reached similar inflation rates to Colombia’s, this may be positive for our economy because...