FXStreet (Edinburgh) – The soft tone in crude oil prices could keep weighing on the Colombian peso, suggested analysts at Goldman Sachs.
Key Quotes
“The recent slide in oil prices has contributed to keeping Colombia’s terms of trade severely depressed”.
“The adverse consequences of this negative shock are increasingly visible in the current account, capital inflows and real business cycle data”.
“The testier external backdrop should exacerbate already sizeable external imbalances, undermining the currency’s fundamentals”.
“Hence, we believe the Peso still has scope to weaken further to shore up the external accounts and protect the government’s budget from lower oil-related fiscal revenues”.
“We have revised our 3-, 6- and 12-month forecasts for $/COP to 2,700, 2,800 and 2,800 respectively from $/COP at 2,500, 2,600 and 2,800 respectively”.
(Market News Provided by FXstreet)