Obama’s Stimulus and Colombia Real Estate

The future of the U.S. Dollar and Colombia Real Estate.

In my last post I talked about and gave an example of the important role that the exchange rate plays in investing in Colombia real estate. Since the March 5, 2009 COP/USD high of 2,611 to 1, the rate has fallen sharply. Does this mean that now is not the time to buy Colombia real estate? Should a potential investor wait until the exchange rate reaches somewhere closer to the early March highs before investing? The answer to both of these questions is a resounding NO.

Obama and inflation

The global economy seems to have, at the very least, reached a bottom. Fearful investors are gaining confidence in the financial markets and the artificial and temporary strength that we witnessed in the U.S Dollar six months ago has long since faded. The future strength of the Dollar and indeed the viability of the Dollar remaining the World’s only reserve currency are in serious question. Agree or not, President Obama has used trillions of dollars of debt to help get our economy back on track and as a result has thrown the United States into levels of debt that would have seemed preposterous five years ago. When the economy does turn around, high inflation is virtually guaranteed.

The major holders of U.S. debt are nervous as the reality of a weak dollar is settling in. Talks about removing the Dollar’s status as the only reserve currency are gaining mainstream recongnition and support. As a result, the Dollar will continue to weaken versus the Colombian Peso and I believe we could see exchange rate levels equal to those seen in the late 1990′s.

In short, I would recommend buying real estate in Colombia at levels down to around 1,800/1. I just read an interesting article on Bloomberg.com about the future of the strength of the U.S. Dollar. It is recommended reading for anyone looking to invest in real estate in Colombia. You can read the article here

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