Dollar in Colombia continues to fall: find out which products of the basic and technological basket will drop in price

For the first time in the last year, the price of the dollar in Colombia reached a floor. Yesterday, Monday, July 17, trading of the U.S. currency closed with a representative market rate (TRM) of $4,069.39, almost 20 pesos below the previous day’s TRM.

This downward trend of the dollar in Colombia has continued in the morning of today, Tuesday, July 18, and intraday trading broke the floor of four thousand pesos when at 9:27 a.m. it reached $3,985.73 per U.S. dollar.

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Some experts find the explanation for this trend in the increased confidence in the markets after learning that interest rate hikes were paused in Colombia, the United States and several European countries. There are even those who predict a dollar in Colombia at $3,700 in the coming months.

For the professor of the International School of Economics and Administrative Sciences of the Universidad de La Sabana, Daniel Gómez, the reasons for this fall are not very clear. However, he stated that these could be related to the “stabilization of market expectations, after the uncertainties generated at the beginning by the new government”.

Undoubtedly, the fall in the price of the dollar impacts the purchasing power of Colombians, particularly of those products of imported origin that make up the family and technological basket, and that in recent months have had to buy at significantly high prices.

In this regard, the academic of the Universidad de La Sabana explains that the fall in the price of the dollar in Colombia could reduce the price of imported products in the country.

This impact will not only have effects on households. The fall in the price of the dollar in Colombia also reduces some business expenses and the productive life of Colombians, closely related to the consumption of technology produced abroad.

More than a year ago, the prices of computers, tablets, cell phones, home appliances and other technological products began to increase in such a way that they became unsustainable, although necessary, expenses for many households.

These are the products that you could find cheaper with the fall of the dollar price in Colombia

Since the country began to replace an important part of its agricultural production with the international food supply, Colombian rural producers found themselves in trouble as they had to compete with highly technified agrarian economies subsidized by their respective States.

At the same time, Colombian families were changing their consumption habits towards imported foods, some of them ultra-processed, which in principle would arrive in the country cheaper, but whose prices have actually oscillated to the sway of international prices and the exchange rate, so they go from cheap to expensive, or very expensive, depending on national and international circumstances.

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A year of an expensive dollar

Due to factors related to the economic slowdown in Colombia and the world, but also to an environment that many have considered of economic and/or social instability, the Colombian currency weakened against the dollar.

Thus, the cost of many products that the country does not produce, although it has the conditions to do so, became more and more expensive in the last year due to the rapid increase in the price of the U.S. currency, which peaked on July 11, 2022, when it reached $5,061.21.

Now, the revaluation of the Colombian peso is expected to push down the prices of imported products.

These are some of those that could become more affordable for households.

Animal protein

Although Colombia does not import eggs, hens and chickens for the production of poultry protein do require imported inputs such as corn and soybean cake.

Between January and April 2023, the value of animal feed imports (feed made up of raw materials such as vegetables, animals and minerals) was US$566 million CIF, a variation of 8.5% compared to those of the same months of 2022, when international purchases were US$522 million, reported the National Administrative Department of Statistics (DANE).

For this reason, the professor of the Universidad de La Sabana, Daniel Gómez, said that “the fall in the price of imported corn could lower the price of meat and chicken”.

Thus, it is expected that the price of imported and locally produced chicken meat will decrease with the fall in the price of the dollar in Colombia, as well as that of imported dairy products such as liquid, powdered, evaporated and condensed milk, cheese and dairy products, among other dairy products from the United States, France and some countries in the region such as Mexico, Bolivia and Peru.

Fish, crustaceans, mollusks and other seafood also entered the country as part of the food supply.

According to DANE, the value of imports of these products between January and April 2023 was US$162 million, which shows a reduction in purchases of these products of 15.7% compared to those of the same period in 2022 (US$192 million).

With the revaluation of the Colombian peso, these products could drop in price, with a consequent increase in demand.

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Cereals, fruits, vegetables and other foodstuffs

According to DANE data, imported foods arriving in Colombia are:

• Cereals and cereal preparations;
• Legumes and fruits;
• Sugars and honey;
• Seeds and oleaginous fruits;
• Oils, fats of vegetable origin and refined fats;
• Coffee, tea, cocoa, special;
• Miscellaneous edible products and preparations;
• Other agricultural products, food and beverages.

Among all these products, the value of imports for the period from January to April 2023 was 2,598 million dollars, a negative variation of 5.14% compared to international purchases for the same period but in 2022, when they reported 2,739 million dollars.

With a less expensive dollar, it is expected that their prices will decrease, although it is important to bear in mind that several of these products will be subject to the so-called healthy tax, which will be levied on sugary beverages and a long list of ultra-processed foods.

Technology

Regarding technology, the expert from La Sabana said that “devices such as tablets and smartphones could become more affordable”.

Indeed, Colombian purchases of international manufactured goods constitute an important consumption group, since Colombia does not stand out for manufacturing electronic devices such as cell phones, computers, tablets and other tools for daily use.

With the downward trend in the price of the dollar in Colombia, the prices of these imported products would also fall. For this reason, July 2023 may be an important month to make this type of purchases with a dollar close to $4,000.

Among the products imported by our country that could be obtained cheaper, compared to some months ago, are appliances and equipment for telecommunications and for sound recording and reproduction; office machines and automatic data processing machines; machinery, apparatus and electrical appliances, their parts and electrical parts.

These are:

• cell phones,
• computers,
• televisions,
• sound equipment for home and professional use,
• home appliances,
• smartwatches,
• printers,
• cameras,
• video cameras,
• video game devices,
• video projectors,
• and other communication technologies.

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