Dollar vs Colombian peso – A 10 year analysis

USD 100 dollar bills

The U.S. Dollar has recently been strong with the dollar increasing above 2,600 Colombian pesos per USD for several days recently. Over the last week, the USD has traded between 2522.85 to 2630.79 pesos per dollar according to the website. Over the past 10 years, the USD has been above 2,600 pesos to the dollar only during three periods, all of which have occurred in the past three months. In 10 years, the exchange rate has been above 2,500 pesos to the USD only during six periods.

The USD hit a high of 2,688 pesos to the USD in March but dropped back to under 2,400 pesos to the USD in May. The exchange rate is now back above 2,500 pesos to the USD and was above 2,600 pesos to the USD for several days in the past week.

USD to COP exchange rate 10-yearThe strong dollar has had some impact on inflation in Colombia with imported items becoming more expensive in terms of pesos resulting in inflation hitting a multi-year high in March. Colombia is a major importer of grains, which total about 7 million tons per year. So an impact of the higher exchange rate has already started to be seen in some food products in the country that are priced in pesos.

But at the same time as inflation has increased in terms of pesos in Colombia, the strong U.S. dollar recently has continued to make costs in terms of U.S. dollars actually much cheaper. So if you receive income in U.S. dollars, the recent inflation seen in Colombia in terms of pesos wouldn’t impact you very much.

The dollar has been strong against the Colombian peso due to the weakness in the price of crude oil (Colombia is a big oil exporter) and the strength in the U.S. dollar over the past few month. The Colombian peso looks to be one of the most vulnerable currency in South America when it comes to weak oil prices.

The Bottom Line

The exchange rate has improved again to above 2,500 pesos per USD making for a significant real estate buying opportunity in Medellín and other cities in Colombia when buying property with U.S. dollars. Real estate is priced in Colombian pesos in the country, so if you are buying with U.S. dollars, you will be saving nearly 40% compared to a year ago with the new exchange rate (or saving about 10% from just a month ago).

The bottom line is that if you have U.S. dollars, the current exchange rate for the Colombian peso is now about 2,500 pesos to the USD, which has only happened during six periods in the past 10 years with none of the periods lasting for very long, so there is no telling how long the latest improved exchange rate will last. But this makes Colombian real estate perhaps the cheapest in the Americas.

The average cost of real estate in the four most popular neighborhoods in Medellín for foreigners based on our recent survey was 2.503 million pesos per square meter, which is now only $999 per square meter at the exchange rate of 2,526 pesos.

The improved exchange rate also makes the cost of living in Colombia much lower if you receive an income in USD, such as someone retired from the U.S. receiving monthly Social Security benefits.

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