Colombian Peso Strengthens While COLCAP Hits Five-Year Peak
(MENAFN- The Rio Times) Trading Economics and Investing data confirm the Colombian peso gained 0.19% against the dollar on September 9, closing at 3,932.50 pesos per USD.
The COLCAP index simultaneously advanced 0.44% to 1,871.14 points, marking a new five-year high and extending its remarkable 40.10% annual surge.
Technical analysis reveals the peso operates well below key moving averages, with the 50-day EMA at 4,050 and 200-day EMA near 4,150 providing strong bearish confirmation.
The currency has broken through critical support at 3,940 and now tests the psychological 3,900 level. RSI readings show the peso approaching oversold territory at 28.02, suggesting potential for near-term consolidation.
Market makers report robust institutional flows supporting the peso's strength. Bank of America Securities analysts indicate Fed rate cuts will unlock aggressive easing cycles across Latin America, benefiting carry trades in high-yielding currencies like the Colombian peso.
The peso has strengthened 8.06% over twelve months, making it one of the region's top performers. COLCAP 's breakout above 1,850 resistance transformed this level into solid support.
The index trades above all major moving averages with daily MACD showing positive divergence and expanding histograms. Volume surged during the breakout, validating the technical advance.
RSI at 57-59 on daily charts indicates room for further gains before reaching overbought conditions. Grupo Argos SA Pref emerged as the session's top performer, surging 5.27% to 11,180 points.
Grupo Nutresa SA followed with a 4.74% advance to 149,780 points, while Grupo Aval Acciones gained 2.52% to 650 points.
Interconnection Electric SA ESP led decliners, falling 3.05% to 22,240 points, with Grupo Bolivar SA dropping 2.18% to 79,720 points. The Global X MSCI Colombia ETF trades at $32.69 with $101 million in assets, reflecting 24.93% annual returns.
Colombian inflation accelerated to 5.10% in August, well above the central bank's 3% target, yet markets focus on the attractive 9.25% policy rate differential against developed markets.
Banco de la República maintains its hawkish stance despite divided board decisions. Four directors voted to hold rates steady in July, while three preferred cuts. The peso's 2.23% monthly gain reflects this monetary policy premium combined with broad dollar weakness.
Global liquidity conditions show mixed signals, with the yellow liquidity index declining from recent peaks but holding above critical support levels. This creates moderate headwinds for emerging market assets, though Colombia's fundamentals offset broader concerns.
The Dollar Index fell 0.14% to 97.32, contributing to peso strength. Fed funds futures price an 88% probability of 25 basis point cuts at the September 17 meeting, with 12% odds for a 50 basis point reduction following weak employment data.
Technical projections suggest USD/COP could test 3,880 support if current momentum persists. COLCAP faces initial resistance near 1,880 points before challenging the psychologically important 1,900 level.
Both markets benefit from Colombia's high real interest rates and improving risk appetite toward Latin American assets. Traders report increased options activity around 3,900 peso levels, indicating institutional positioning for further dollar weakness.
Mining and utilities sectors lead COLCAP gains, supported by stable commodity prices and infrastructure investment flows.
The COLCAP index simultaneously advanced 0.44% to 1,871.14 points, marking a new five-year high and extending its remarkable 40.10% annual surge.
Technical analysis reveals the peso operates well below key moving averages, with the 50-day EMA at 4,050 and 200-day EMA near 4,150 providing strong bearish confirmation.
The currency has broken through critical support at 3,940 and now tests the psychological 3,900 level. RSI readings show the peso approaching oversold territory at 28.02, suggesting potential for near-term consolidation.
Market makers report robust institutional flows supporting the peso's strength. Bank of America Securities analysts indicate Fed rate cuts will unlock aggressive easing cycles across Latin America, benefiting carry trades in high-yielding currencies like the Colombian peso.
The peso has strengthened 8.06% over twelve months, making it one of the region's top performers. COLCAP 's breakout above 1,850 resistance transformed this level into solid support.
The index trades above all major moving averages with daily MACD showing positive divergence and expanding histograms. Volume surged during the breakout, validating the technical advance.
RSI at 57-59 on daily charts indicates room for further gains before reaching overbought conditions. Grupo Argos SA Pref emerged as the session's top performer, surging 5.27% to 11,180 points.
Grupo Nutresa SA followed with a 4.74% advance to 149,780 points, while Grupo Aval Acciones gained 2.52% to 650 points.
Interconnection Electric SA ESP led decliners, falling 3.05% to 22,240 points, with Grupo Bolivar SA dropping 2.18% to 79,720 points. The Global X MSCI Colombia ETF trades at $32.69 with $101 million in assets, reflecting 24.93% annual returns.
Colombian inflation accelerated to 5.10% in August, well above the central bank's 3% target, yet markets focus on the attractive 9.25% policy rate differential against developed markets.
Banco de la República maintains its hawkish stance despite divided board decisions. Four directors voted to hold rates steady in July, while three preferred cuts. The peso's 2.23% monthly gain reflects this monetary policy premium combined with broad dollar weakness.
Global liquidity conditions show mixed signals, with the yellow liquidity index declining from recent peaks but holding above critical support levels. This creates moderate headwinds for emerging market assets, though Colombia's fundamentals offset broader concerns.
The Dollar Index fell 0.14% to 97.32, contributing to peso strength. Fed funds futures price an 88% probability of 25 basis point cuts at the September 17 meeting, with 12% odds for a 50 basis point reduction following weak employment data.
Technical projections suggest USD/COP could test 3,880 support if current momentum persists. COLCAP faces initial resistance near 1,880 points before challenging the psychologically important 1,900 level.
Both markets benefit from Colombia's high real interest rates and improving risk appetite toward Latin American assets. Traders report increased options activity around 3,900 peso levels, indicating institutional positioning for further dollar weakness.
Mining and utilities sectors lead COLCAP gains, supported by stable commodity prices and infrastructure investment flows.
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