The dollar closed its worst year since the pandemic in 2023 while on Wall Street, bets grew for an interest rate cut in 2024. The Dollar Index, which measures the value of the US currency against a basket including the euro, the Swiss franc, the Japanese yen, the Canadian dollar, the British pound, and the Swedish krona, fell by 2.0%, driven by false alarms about changes in the Federal Reserve’s interest rate hike policy.
Much of the currency’s decline occurred in the fourth quarter, due to expectations that the Fed will ease its policy as the US economy slows down, reducing the dollar’s attractiveness, as other central banks may keep their rates higher for longer.
The peso, the emerging currency with the greatest revaluation
The weakness of the dollar translated into revaluation figures for other currencies. By January 1, 2023, the US currency was trading at $4,810, ending the year at $3,822. The dollar in the Colombian context fell by $988 over the year, representing an appreciation of 25.8% for the national currency. Thus, the Colombian peso emerged as the emerging currency that appreciated the most against the dollar, surpassed globally only by the Afghan Afghani, which accumulated a gain of 26.3% in the year against the dollar as a benchmark.
Emerging currencies’ behavior so far in 2023Colombian and Mexican pesos are the emerging currencies that have risen the most this year
The Mexican peso was another currency with a better performance against the dollar during the ended year, gaining 14.8%. The appreciation of the Mexican currency is explained by the central bank’s aggressive policy of increasing interest rates, representing an attractive investment seeking better returns than in other contexts. Alongside the Mexican peso, at the top of the list are the Swiss franc, with an accumulated gain in the year of 9.8% against the dollar, and the Brazilian real, which closed with an appreciation of 9%.
Today: TRM hoy in Colombia
The euro, in the seventh position among these benchmarks, recorded a gain of 3.2% compared to the US dollar, while the British pound, sixth in the ranking, appreciated by 5.3%.
The biggest losers
The Turkish lira is on the opposite side, continuing a depreciation against the dollar of 36% in 2023 and reaching 94% over the last decade due to political crises that have deterred foreign investment.
The Russian ruble was also among the most depreciated currencies last year, accumulating a 17.5% fall against the dollar; a result that bears the brunt of sanctions imposed since its invasion of Ukraine on hydrocarbon exports, which largely sustain Russia’s economy.
Today: Euro hoy in Colombia
Out of ranking
Special mention deserves the Argentine peso and the Venezuelan bolivar, which recorded devaluations of 78% and 51% respectively in the ended year, constituting extreme cases of depreciation, not only in Latin America but in the world.
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