Date of Award

5-2026

Document Type

Thesis

Degree Name

Bachelor of Arts (BA)

Department

Social Sciences

First Advisor

Khemraj, Tarron

Area of Concentration

Financial Economics

Abstract

This thesis analyzes exchange rate movements between the Colombian Peso (COP) and the US Dollar (USD), focusing on the role of international oil prices and other variables such as inflation and interest rates. Given that Colombia's economy relies heavily on the export of raw materials, it is expected that fluctuations in oil prices will be reflected in the dynamics of the exchange rate. The analysis also incorporates the theories of Uncovered Interest Parity (UIP) and Purchasing Power Parity (PPP). For this analysis, monthly data spanning the period from 2014 to 2026 will be utilized, employing an econometric approach that includes an OLS model and a GARCH (1,1) model. Furthermore, the stationarity of the variables will be verified using the ADF test to ensure the validity of the estimation. The results of this analysis indicate that oil prices have a significant relationship with the exchange rate; specifically, increases in oil prices are associated with an appreciation of the Colombian Peso. On the other hand, the GARCH model provides robust evidence of volatility clustering and persistence. Consequently, the analysis highlights the dependence on raw materials, and the role these economies play in the face of external shocks, in shaping exchange rate behavior within emerging economies.

Rights

The author has granted New College of Florida the nonexclusive right to archive, make accessible, and distribute for educational purposes this work in whole or in part in all forms of media, now or hereafter known. The copyright of this work remains with the author.

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