During the time period starting in March 2000 and ending in March 2002, the Colombian peso has lost value in relation to the US dollar. The drop between March 2000 and June 2001 was quite gradual. However, the peso has remained stable since that time and has actually re-gained some of its lost value. The fall in value was slow in the mid-90's but accelerated in 1998 around the time Colombia was entering a major recession.
A number of factors have affected the country's exchange rates in the last two years. In this time period, the country was recovering from its first major recession since 1931. In recent years, inflation and the unemployment rate have been quite high. The country's main export items are commodities, which have gone through a period of low trading prices. .
Colombia is still in the midst of a civil war, which has seen the guerrilla group Revolutionary Armed Forces of Colombia (FARC) take control of 40 percent of the country. Also involved in the war are other guerrilla groups and various paramilitary groups originally funded by the drug cartel. The political instability has had a great effect on Colombia's economy. A great amount of money is spent on the country's military while the instability has dampened the interests of foreign investors.
The drug production has also played a huge role in Colombia's economy. The cocoa plant, which is used to make cocaine and heroin, is grown in the southern and eastern regions of the country. These regions are controlled mostly by the FARC who use the profits of drug trafficking to support their military and the citizens who grow the plant.
Country Background.
Colombia is an attractive market that has a multitude of demographic, geographic and cultural advantages. The country is strategically located at the northwest tip of South America. This places the country within easy access of southern US ports, Colombia's most important trade partner.