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History of Colombian Peso (COP)

Last Updated on April 4, 2022 by InfomediaNG

The Colombian peso isn’t just one of the troubled currencies, but it is also one of the weakest among the South American countries. For instance, it was thought to have hit the lowest in 2015 when just one USD was worth 3,032 COP. But today, it has slipped further 3,748.81 COP to $1.

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A Glimpse Into USD to Colombian Peso Exchange Rate

  • USD to COP is 3748.81 COP
  • EUR to Colombian currency is 4123.99 COP
  • Pound to Colombian Peso is 4910.62 COP

Just like the Nigerian economy that relied on revenue from oil which affected its naira, Colombia’s economy is an oil-dependent economy.

So, how did the Colombian currency come to where it currently is? Below is a history of the Peso, the official currency in Colombia, one of the South American countries.

The currency uses the US dollar sign while its COP is its code. Most times COL$ is used to distinguish it from the dollar-denominated currencies and other pesos.

Before the currency stopped minting of centavo in 1984, one peso was subdivided into hundred centavos. The stoppage of the minting of the centavos was due to its worthless as a result of high inflation that hit Colombia in the 1970s and 1980s.

It is still legal tender, but what the essence of a currency that is worth nothing in the market.

Evolution of Colombian Currency

Originally, peso wasn’t the official currency of the oil-rich country. It used the Spanish real till it attained political and monetary independence on 1820.

The country immediately replaced the Spanish colonial real with the Colombian real. And 17 years after, the present peso was introduced as the country’s legal tender.

At the time, one peso was eight reales (plural or real)

By 1847, the peso was subdivided into 10 reales. As if the country’s leaders were experimenting, the real was renamed decimo and the last reales were struck in 1880.

Pegging the peso to French franc

It’s on record that the current system of 100 ”centavos” to the peso were first used in 1819 on early banknotes, however, it did not reappear until the early 1860s on banknotes and was used on the coinage in 1872.

In 1871, Colombia pegged its currency to the French franc at one pseo to 5 francs. The pegging only lasted a few years and ended by 1886. The event of 1888 showed that inflation isn’t new to the Colombian economy. That’s when printing press inflation caused Colombia’s paper money which was pegged (using the gold standard) to the GBP 5 pesos to one Pound to slide and the exchange rate between coins and paper money was fixed at 100 peso moneda corriente to one coinage peso.

Using the gold standard to peg the country’s currency was seen as temporary by some monetary analysts at the time. But the country pushed further as a measure to monitor and control the increasing inflation.

The new century ushered in new monetary policies as Colombia issued coins that were denominated in peso to equal to paper pesos.

Issuance of Banknotes By Conversion Board

In 1910, the Conversion Board of Colombia started issuing banknotes in the form of peso oro.

Since the inception of the Colombian currency, the country had never been consistent with a monetary policy.

The Colombian economy is notorious for shifting the goalpost every time there was a slight shake in the global economy showing signs of an unstable economy.

Again, in 1931 Colombia shifted its peg to the USD when the U.K. left the gold standard. It is pegged at $1 to 1.05 pesos.

It maintained the policy till 1949. And the peso banknotes were issued, expressed as peso oro till 1993.

As if the precious denominations were not enough, in 2018, lawmakers in Colombia debated the possibility and impact of re-denomination of the peso would bring by removing the three zeroes from its face value, meaning 1,000 peso would be 1 peso.

They hid under the guise of simplifying accounting and banking operations. But in 2016, instead of the removal, the president supported the proposal to remove the last three zeros which would be replaced with the word “mil” (thousand), to enable the printing of the same banknotes with the word “mil” replaced by the word “nuevos” (new).

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The proposed change didn’t see the light of the day as it faced fierce criticisms from the opposition about the high cost it would have on commodities.

Coins and Banknotes

The Colombian currency, denomination, re-denomination, introduction and re-introduction of currencies has been phenomenal, yet it’s economy remains troubled by the global oil price.

For instance, since 1837 to 2012, the list of coins that were introduced was long, some of them include silver ¼, ½, 1, 2, among others.

By 2002, the coin was out of circulation and the minting of 5, 10 and 20 peso coins die a natural death due to inflation.

In 2012, Banco de la República – Colombia (i.e Bank of the Republic of Colombia) introduced into the economy a new series of coins with the 500 and 1000 peso coins now struck as Bi-metallic coins.

The same money is being experienced in the introduction of banknotes in Colombia after the independence till date.

It’s also important to quickly point out that five provinces – Bolívar, Cundinamarca, Santander, Cauca, and Panama – in the country once introduced their own paper money between 1857 and 1880.

Today, the banknotes you can find in the hands of its citizens and visitors to the country include $1,000, $2,000, $5,000, $10,000, $20,000, $50,000 (which went into circulation on August 19, 2016), and $100,000 (the highest denomination at the time of publication), which was issued in 2016.

Colombians remain worried over inflation

While the Banco de la República continues to introduce measures that are expected to benefit the people, its citizens express worry.

For instance, the bank on its official Facebook page @BancoRepublica on April 2, 2022 posted, saying:

“The ticket with the highest circulation was $50,000. This ticket went into circulation on August 19, 2016. Exalt the terraces of Ciudad Lost, the images of two indigenous people and some homes of the Tayrona culture. “

Facebook

But Colombians didn’t find anything exciting about the update. One of them, Miguel Higuita, said, “Inflación a la vista” meaning inflation in sight!

In another post the bank shared another update about taming inflation, another user reacted, saying, Hjrfokcdsevkllmcdwtvl Torres said:

“Es necesario, la inflación está por las nubes. Ojalá mitigue y de verdad sirva para que salga tanto dinero en circulación, la gente se endeude menos y ahorre”

Facebook

Meaning, “Necessary, inflation is due to the clouds. I hope it mitigates and it really works to get so much money in circulation, people borrow less and save.”

Would the Colombian peso bounce back?

Colombian currency is the worst, but it’s hopeful that it does better. For instance, the economic crisis in Venezuela which affected bolívar pushed some parts of the country to adopt the Colombian peso.

Though both countries are on the list of weakest currencies in South America, while the Venezuela bolívar is the most worthless, COP occupies the fourth position.

If Colombia can leverage its production capacity power in sugarcane, crude oil and Coal briquettes, coffee, avocado, palm oil, row its energy sector, and other agricultural products that are in high demand on the global market, maybe the Colombian peso will bounce back. Tal vez, si hace las cosas bien (maybe, if it does things right).

Sources:

  1. Featured image by Banco de la República Facebook page
  2. Banco de la República – Colombia at banrep.gov.co
  3. Oxford Business Group. “Colombia’s energy sector grows as oil and gas resources expand”. oxfordbusinessgroup.com. Retrieved April 4, 2022
  4. Susan Mathew and Ambar Warrick (OCTOBER 29, 2021). “EMERGING MARKETS-Colombian peso rises on rate hike, Mexican FX slumps on weak GDP”. Reuters.com. Retrieved April 4, 2022
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