Medellin Chit Chat Thread

[Surfer500]

5000 is my next ATM visit.

I think so, the XE Rate just broke 4602, heck the way it's going it may hit 5,000 by the end of the week, then it's a matter of figuring out what day you can actually get that amount out of the ATM's. Hopefully our Financial Currency Advisor's Funluvr and Villany can advise us all when to hit the ATM's to get the 5,000 if it goes that high.

[Zeos1]

Dude. No. There are not discounts on foreign currencies. You're not going to buy a dollar for 94 cents ever, either.

Other way around. What he said was you are getting charged a 6% commission when you look at his example. Which is often the case.

[Caboteur]

Can we keep this forum for mongering purpose? This morning there's a full page of review about exchange rate, why are you guys are so concern about that, to save 2-3 buck?

[Huacho]

Let's assume he finds a source to get COP at 6% off cost

Dude. No. There are not discounts on foreign currencies. You're not going to buy a dollar for 94 cents ever, either.

[Lucky Nuts]

Ruling by decree and bypassing Congress is not so easy. He would have to declare an emergency and that is subject to review by the Constitutional Court which (by the way) is centrist and not far left leaning.

https://theglobalamericans.org/2022/...tro-hard-time/

Higher inflation data has probably had more of an effect than anything else.

That's a great article you linked thanks much for that detailed synopsis!

I expect Petro will rule by decree and let the Constitutional Court attempt to clean up the mess. We'll find out next month.

And that his policies will be good news for gringos trading dollars for pesos. Still we may hit a peak before he even takes office on "buy the rumor and sell the news".

[Elvis 2008]

There is a bit of overthinking in this series of posts. I don't find politics especially interesting, so I tend to avoid spending a lot of time thinking about it.

The two most likely scenarios are actually both beneficial to mongers. If the status quo is kept, mongers actually enjoy the exchange rate benefits and cheaper pussy. The pie size stays the same.

If this guy follows the Chavez-Morales method, you actually contract the economy by seizing industries and putting them under government control. The pie typically shrinks in this scenario but because Gustavo controls all the money, there are no well funded rivals to take him on. If the pie shrinks, mongers benefit as their currency goes further. Thing is to keep all your assets abroad or on your person when visiting Colombia because private property is not respected. The pussy cost goes down, but safety goes down, and shitty, negative attitudes are the norm.

The worst for mongers would be seeing Gustavo put forth growth ideas because Colombia would be richer and our dollars would not go as far. The issue with that is when you grow the pie, you have more well funded rivals able to topple you. You never say never but I doubt anyone need worry about that.

[JjBee62]

Huh? What? So if you DO plan to spend a lot of time in Colombia there IS an advantage to buying COP in the Yew Ess? What? WTF? You'll only save a few dollars? Save a few dollars how? You'll get absolutely fucked senseless buying COP in the Yew Ess.

Really scratching my head on this one. There is no advantage whatsoever to obtaining COP in the Yew Ess at any time, under any circumstances, for any reason.

Don't scratch your head too hard over it. I never said it was advantageous to buy COP in the US. I merely stated that at best there would be only minimal benefit for a short term visitor.

However, here's a hypothetical situation. Someone is retiring in 6 months and plans to move to Colombia for 6 months following retirement. Let's assume he finds a source to get COP at 6% off cost (if rate is 4000 he gets 3760). If long-term projection is a rate of 4 k in 6 months and it spikes to 5 k next week, he can buy $5,000 at 4700 and get 3. 5 million more than if he waits 6 months (assuming the rate returns to 4 k).

But, it's all a gamble and assumes you can find a decent rate to begin with, along with spending enough time and money in Colombia to make it worthwhile.

[Chicago85]

(The low peso might have something to do with the change in administration. } Yes that is the main reason. People who control the rates are afraid of the new Pres being a communist. This was mentioned before the election that if this man wins the pesos would take a hit.

Funny first I used to divide by 2 then 3 then 4. Now maybe 5 will be the new division point in the near future.

I posted in the main Medellin Report thread, but here as well. I personally think Petro is the #3 reason or so. He's not a Communist, but more a Socialist. The question is whether he's a Maduro Socialist or Bernie Sanders. I think most think the latter, but the issue is even then it will reduce foreign investment. Also while he did get the majority of votes, his party only controls a small portion of their congress so it may limit what he can get through. Hopefully he doesn't get power hungry like Maduro, Orgega, or the guy in El Salvador.

It's 4 or 5 things. In rough order of effect:

1) Rising interest rates in the US is making dollars more attractive to hold and nearly all other currencies go down relative (look at the GBP and Euro). Emerging markets hit worse than established ones.

2) Declining price of oil recently (although still high historically) which is Colombia's largest export and driver of GDP.

3) Petro winning which is expected to reduce foreign investment and grow national debt. He did name a moderate central banker as his Finance Minister so that has tempered some expectations.

4) Belief that the populace will want to push through more progressive measures and anecdotal evidence of rich Colombians accelerating their movement of money outside of the country (I. E. The rich and businesses don't even think it's safe to keep money in-country).

5) Ukraine / Russia. At any time there is a conflict that could expand worldwide people will seek out more stable currencies. On the flip side, the conflict initially causes a dramatic increase in the price of oil which should have helped the COP.

6 - Bonus!) Budget deficit. Colombia had to run a bit hot with a 7% or 8% deficit during Covid. Normal would be around 3 to 4%.

The amazing thing to me is the exchange rate given the historically high price of oil. Without Petro I bet it would be around 3500 to 3700 right now.

[Knowledge]

There is a bit of overthinking in this series of posts. I don't find politics especially interesting, so I tend to avoid spending a lot of time thinking about it. In practical terms Petro and any Latin America leader is beholden to powerful interests beyond the will of their citizens and constitutional law. In no particular order, the powerful interests that are high the list are: the International Monetary Fund, narcotraffickers, paramilitary organizations, the military, wealthy landowners (especially in Colombia). Government policy in developing countries generally support a balancing act between the prevention of civil unrest and maintaining the status quo of inequity in which a very small segment of the population controls all significant sources of the countries' wealth. In developing countries the source of wealth is combination of natural resources and the land on or beneath which they lie, and labor. Petro or any other leader who attempts to disrupt this system will be eliminated via exile, assassination, or coerced resignation. It's no more complicated than that.

Ruling by decree and bypassing Congress is not so easy. He would have to declare an emergency and that is subject to review by the Constitutional Court which (by the way) is centrist and not far left leaning.

https://theglobalamericans.org/2022/...tro-hard-time/

Higher inflation data has probably had more of an effect than anything else.

[Zeos1]

I'm not so sure about this. The Ukraine war is driving down the Euro and GBP. The low peso might have something to do with the change in administration. Many other currencies are unchanged against the US dollar.

Look at the US dollar against the basket measure of other currencies, it is extremely strong. All, or almost all, other currencies are down against the US dollar in the past couple of months. Things that happen in the individual countries may modify that a bit, but by far the biggest part is the strength of the US dollar. It is considered a safe haven with rising interest rates, inflation, etc. Etc. And especially as US Fed raises rates the US dollar strengthens, as not all other central banks are raising rates as quickly.

[Huacho]

Maybe one couldn't get away for now, but also thought the exchange rate had reached it's peak, or that person thought the US dollar might tank.

Therefore that person would buy an extremely illiquid and poorly convertible currency, with high transaction costs (especially the bid-ask spread) and hold it in physical uninsured theft prone cash in hopes of some future possible visit. Or, that person thinks they are smarter than the global currency traders. Neither passes my logic test. Even if a particular person thought the US dollar 'might tank,' why would that lead one to COP vs. A more stable and convertible currency?

[Huacho]

Unless you plan on spending a lot of time in Colombia there's no advantage to buying pesos in the USA. You'll only save a few dollars.

Huh? What? So if you DO plan to spend a lot of time in Colombia there IS an advantage to buying COP in the Yew Ess? What? WTF? You'll only save a few dollars? Save a few dollars how? You'll get absolutely fucked senseless buying COP in the Yew Ess.

Really scratching my head on this one. There is no advantage whatsoever to obtaining COP in the Yew Ess at any time, under any circumstances, for any reason.

[Villainy]

According to this article a new President has "90 days as president during which decrees can be signed without the support of Congress".

https://time.com/6188361/colombia-pr...lfo-hernandez/

My expectation is that the peso will conitinue to weaken somewhat as Petro increases social programs spending. But much of that is already priced in at well over 4000. You might recall the rate quickly jumped back to 3700 the Monday after it looked like Hernandez would be a serious contender in the runoff.

And as the Fed increases rates the dollar will stay strong. So I think we'll be enjoying a great exchange rate for some time to come. Anything over 4000 is "great" imo. We might even be treated to some "super great" rates LOL.

Ruling by decree and bypassing Congress is not so easy. He would have to declare an emergency and that is subject to review by the Constitutional Court which (by the way) is centrist and not far left leaning.

https://theglobalamericans.org/2022/...tro-hard-time/

Higher inflation data has probably had more of an effect than anything else.

[TooDirty]

Absolutely flat ass nowhere and why on earth would you want to do that?

Maybe one couldn't get away for now, but also thought the exchange rate had reached it's peak, or that person thought the US dollar might tank.

[Lucky Nuts]

You think so, huh? You are aware that Colombia has a political system that in many ways is very similar to the US. The Legislature enacts laws just as they do in our political system.

The Legislative branchs duty is to amend the constitution, make laws ,and exercise political control over the government and the administration. Congress is the body in charge of the legislative function and it is made up of the Senate and the House of Representatives. (Constitucin Poltica de Colombia. Art. 114. (1991)).

So, fear that a leftist President is going to create a Communist state is patently absurd. Petro has nothing close to major support in the Senate or the House of Representatives.

So, what caused the peso to devalue by almost 10% in the last 2 months (5-11 to 7-11) is tied to a plethora of causes. The Fed raising interest rates causes US Governments to trade at lower values and therefore higher rates (Interest Rates and Bond Prices are inversely related). Countries that held Colombian Governments are trading into more secure and higher earning US Governments. Colombia has also printed higher inflation than it has in many years, which is no doubt creating a rush to the world's reserve currency. Oil prices are wavering and oil is Colombia's main export.

There are probably 20 more factors that interact in how the Colombian currency trades vs. US currency. Petro's election is probably a minor factor.

People who control the rates?? People who actively trade (currency traders) Colombian Pesos are not ignorant of how Colombia's political system works.

According to this article a new President has "90 days as president during which decrees can be signed without the support of Congress".

https://time.com/6188361/colombia-pr...lfo-hernandez/

My expectation is that the peso will conitinue to weaken somewhat as Petro increases social programs spending. But much of that is already priced in at well over 4000. You might recall the rate quickly jumped back to 3700 the Monday after it looked like Hernandez would be a serious contender in the runoff.

And as the Fed increases rates the dollar will stay strong. So I think we'll be enjoying a great exchange rate for some time to come. Anything over 4000 is "great" imo. We might even be treated to some "super great" rates LOL.