Factorial analysis as a technique for reducing variables in the structuring of a Colombian exchange rate index [Análisis factorial como técnica para reducción de variables en la estructuración de un índice cambiario colombiano]

Abstract

Amid the current economic environment, the dollar continues to prevail as the world reference currency, for this reason it is important for many participants in the foreign exchange market to study, learn about and propose new alternatives that provide a tool that favors the analysis of the financial panorama for decision making. In the factor analysis, a way was found to present adequate results applied to several variables selected for the certainty they have within the Colombian exchange market. With this, the dimensionality of the variables will be reduced to those that really explain the highest correlation to be applied to a structuring model of a Colombian exchange rate index that will serve as a benchmark and as a tool for making financial decisions. © 2023, Associacao Iberica de Sistemas e Tecnologias de Informacao. All rights reserved.