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Colombian Peso Rally Pauses As Stocks Ease From Record Highs
(MENAFN- The Rio Times) The Colombian peso is catching its breath after a dramatic two-day surge that briefly drove the dollar below COP 3,700 for the first time since 2021.
In early Friday dealing the exchange rate was hovering around COP 3,740–3,750 per dollar, slightly weaker than Thursday's intraday low near COP 3,690 but still close to its strongest levels in three years.
Official market data put Thursday's representative rate (TRM) at COP 3,719.71, about COP 140 stronger than at the start of November, meaning the peso has appreciated roughly 4% this month and around 14% so far in 2025.
Local desks describe Thursday as a capitulation move for the dollar, helped by sizable“official flows” linked to the government's FX management strategy and by expectations that the central bank will stay cautious on rate cuts after October inflation surprised on the upside at 5.51% year-on-year while the policy rate remains at 9.25%.
Accivalores noted that the peso“extended its rally” and closed around COP 3,706 per dollar, leading EM currency gains and marking its strongest level in three years.
Globally, the backdrop is a softer U.S. dollar. The DXY index is trading near 99, a two-week low and on track for a weekly loss of roughly 0.4% as investors reassess the Federal Reserve's ability to keep rates high in the face of softer incoming data.
BanRep governor Leonardo Villar underlined that Colombia's FX move is part of a broader pattern, saying the peso's strength“is mainly an international phenomenon” driven by a generalized depreciation of the dollar, even as he kept the door open to tighter policy if inflation does not ease.
On the 4-hour USD/COP chart, the sharp slide below COP 3,700 has pushed momentum indicators into oversold territory, with the RSI rebounding from below 30 toward neutral and the MACD starting to curl higher from deeply negative levels.
On the daily chart, however, the pair remains locked in a clear downtrend that began above COP 4,400 earlier in the year, with prices trading beneath a falling trendline and the Ichimoku cloud, and daily RSI still below 40.
Taken together, the technical picture suggests that while a short-term corrective bounce toward the COP 3,760–3,800 zone is possible, the broader trend still favours a stronger peso unless U.S. data or local policy signals trigger a sustained reversal.
Colombia's equity market has been enjoying the other side of the same macro story. After breaking through the 2,000-point mark for the first time in its history last week and chalking up gains of around 45% year-to-date, the MSCI COLCAP index slipped back to about 2,052 points on Thursday, a fall of roughly 0.8–1.4% on the day but still near record territory.
The pull-back came as investors digested a wave of corporate news, including solid third-quarter results from Ecopetrol and Grupo Sura, whose shares have surged far more than the benchmark over the past year.
Index mechanics are also in focus. A rebalancing of the MSCI COLCAP basket will bring retailer Grupo Éxito back into the benchmark later this month while removing ETB and Canacol, a change highlighted by local brokers as supportive for turnover and sector diversification.
Internationally, Colombia-linked equity ETFs have been among the best performers in the global“region and country” segment over the past week, in a channel that attracted about $0.36 billion of net inflows, signalling renewed foreign interest in Colombian risk.
Technically, the COLCAP's daily chart still shows a robust upward trend, with prices riding the upper Bollinger band and the 50-day moving average sloping steeply higher.
Momentum, however, is looking stretched: daily RSI has retreated from the high-70s and MACD histograms are narrowing, while the 4-hour chart reveals a loss of upside momentum and an initial bearish crossover in MACD.
That combination points to a market that remains structurally bullish but vulnerable to a consolidation phase or shallow correction toward the 2,000–2,020 support band after an exceptional run.
In sum, Colombia heads into Friday with a currency that has become one of the strongest in the emerging-markets universe and an equity market still near all-time highs but finally pausing for breath.
As long as U.S. yields drift lower, DXY stays under pressure and BanRep maintains one of the highest real rates in the region, the bias remains for a firm peso and resilient local assets-albeit with rising two-way risk after such a fast move.
In early Friday dealing the exchange rate was hovering around COP 3,740–3,750 per dollar, slightly weaker than Thursday's intraday low near COP 3,690 but still close to its strongest levels in three years.
Official market data put Thursday's representative rate (TRM) at COP 3,719.71, about COP 140 stronger than at the start of November, meaning the peso has appreciated roughly 4% this month and around 14% so far in 2025.
Local desks describe Thursday as a capitulation move for the dollar, helped by sizable“official flows” linked to the government's FX management strategy and by expectations that the central bank will stay cautious on rate cuts after October inflation surprised on the upside at 5.51% year-on-year while the policy rate remains at 9.25%.
Accivalores noted that the peso“extended its rally” and closed around COP 3,706 per dollar, leading EM currency gains and marking its strongest level in three years.
Globally, the backdrop is a softer U.S. dollar. The DXY index is trading near 99, a two-week low and on track for a weekly loss of roughly 0.4% as investors reassess the Federal Reserve's ability to keep rates high in the face of softer incoming data.
BanRep governor Leonardo Villar underlined that Colombia's FX move is part of a broader pattern, saying the peso's strength“is mainly an international phenomenon” driven by a generalized depreciation of the dollar, even as he kept the door open to tighter policy if inflation does not ease.
On the 4-hour USD/COP chart, the sharp slide below COP 3,700 has pushed momentum indicators into oversold territory, with the RSI rebounding from below 30 toward neutral and the MACD starting to curl higher from deeply negative levels.
On the daily chart, however, the pair remains locked in a clear downtrend that began above COP 4,400 earlier in the year, with prices trading beneath a falling trendline and the Ichimoku cloud, and daily RSI still below 40.
Taken together, the technical picture suggests that while a short-term corrective bounce toward the COP 3,760–3,800 zone is possible, the broader trend still favours a stronger peso unless U.S. data or local policy signals trigger a sustained reversal.
Colombia's equity market has been enjoying the other side of the same macro story. After breaking through the 2,000-point mark for the first time in its history last week and chalking up gains of around 45% year-to-date, the MSCI COLCAP index slipped back to about 2,052 points on Thursday, a fall of roughly 0.8–1.4% on the day but still near record territory.
The pull-back came as investors digested a wave of corporate news, including solid third-quarter results from Ecopetrol and Grupo Sura, whose shares have surged far more than the benchmark over the past year.
Index mechanics are also in focus. A rebalancing of the MSCI COLCAP basket will bring retailer Grupo Éxito back into the benchmark later this month while removing ETB and Canacol, a change highlighted by local brokers as supportive for turnover and sector diversification.
Internationally, Colombia-linked equity ETFs have been among the best performers in the global“region and country” segment over the past week, in a channel that attracted about $0.36 billion of net inflows, signalling renewed foreign interest in Colombian risk.
Technically, the COLCAP's daily chart still shows a robust upward trend, with prices riding the upper Bollinger band and the 50-day moving average sloping steeply higher.
Momentum, however, is looking stretched: daily RSI has retreated from the high-70s and MACD histograms are narrowing, while the 4-hour chart reveals a loss of upside momentum and an initial bearish crossover in MACD.
That combination points to a market that remains structurally bullish but vulnerable to a consolidation phase or shallow correction toward the 2,000–2,020 support band after an exceptional run.
In sum, Colombia heads into Friday with a currency that has become one of the strongest in the emerging-markets universe and an equity market still near all-time highs but finally pausing for breath.
As long as U.S. yields drift lower, DXY stays under pressure and BanRep maintains one of the highest real rates in the region, the bias remains for a firm peso and resilient local assets-albeit with rising two-way risk after such a fast move.
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