Colombia Market Report Feb 10, 2026: COLCAP Rebounds Above 2,396 As Inflation Hits 5.35% And Peso Strengthens

(MENAFN- The Rio Times) The Big Three 1 January inflation confirmed the upward drift - CPI rose to 5.35% YoY, validating BanRep's shock rate hike. The DANE data released February 6 showed a 1.18% monthly increase driven by transportation and food, reinforcing the central bank's decision to raise rates by 100 bps to 10.25% and keeping the door open for further tightening. 2 The COLCAP rebounded above 2,396, recovering from last week's 4.23% sell-off as dip-buyers returned. The MSCI COLCAP Index opened the new week at 2,396.01, up +1.09% on the daily session, with price trading above the Ichimoku cloud on the 4-hour chart and reclaiming ground toward the 2,400 resistance zone - though the weekly RSI at 77.45 remains in overbought territory. 3 The peso strengthened further to COP 3,672 per dollar - its firmest level since early 2024. USD/COP continued its grind lower, closing at 3,672.1 with the dollar weakening globally (DXY fell to ~97) amid expectations of further Fed rate cuts and easing US-Iran tensions. The carry-trade appeal of Colombia's 10.25% rate continues to draw flows into the peso. Market Snapshot

Indicator	Close	Change
COLCAP Index	2,396.01	+1.09% (daily)
COLCAP (Weekly)	2,396.01	+1.09%
USD/COP	3,672.1	-0.26% (peso stronger)
BanRep Rate	10.25%	+100 bps (Jan 30)
Colombia CPI (YoY, Jan)	5.35%	+0.25pp from Dec
Brent Crude	$68.98	+1.37%
Gold (XAU/USD)	$5,036.91	+0.94%
DXY (Dollar Index)	96.89	-0.76%

What Happened

Colombia's markets entered the second week of February with a cautious recovery underway. After last week's 4.23% COLCAP plunge - the worst of 2026 - dip-buyers stepped in to push the index back above 2,396, while the peso continued its relentless strengthening trend, touching 3,672 per dollar amid a broadly weaker greenback.

The key development over the weekend was the digestion of Colombia's January inflation data, released on February 6. The CPI came in at 5.35% year-over-year, up from 5.10% in December, confirming the upward drift that had prompted BanRep's January 30 shock rate hike. The monthly print of 1.18% was sharp - driven by transportation (2.14%), restaurants and hotels (2.94%), and food (1.66%) - though analysts noted it came in below some of the more aggressive forecasts from the banking sector.

The inflation data validated the central bank's hawkish pivot. As ColombiaOne reported, the reading "confirms fears of a return to an inflationary path" and has intensified speculation about further rate hikes at the next board meeting. Most board members favor restoring higher rates to contain inflation, placing them at odds with the Petro government, which continues to call for cuts to stimulate growth.

Globally, risk appetite improved as US-Iran nuclear talks in Oman showed progress, with both sides describing discussions as "a good start." The dollar weakened to 96.89 on the DXY - down more than 10% over the past year - as Chinese regulators advised financial institutions to limit US Treasury exposure and markets priced in the possibility of further Fed rate cuts. Gold surged back above $5,000 per ounce.

The combination of a falling dollar and a hawkish BanRep continued to support the peso. USD/COP has now declined roughly 12.5% from its September 2025 peak above COP 4,200 per dollar, making the peso one of the best-performing emerging market currencies so far in 2026.

On the political front, Colombia's attention is turning to the March 8 legislative elections and simultaneous presidential primaries. The right has consolidated into a "Great Consultation for Colombia" led by Paloma Valencia and Vicky Dávila, while the left's Broad Front primary has been weakened by the exclusion of leading candidate Iván Cepeda. The approaching double electoral calendar - Congress in March, presidential first round on May 31 - adds a layer of political risk that markets are only beginning to price in.

COLCAP Index - Daily Chart MSCI COLCAP Index · Daily · BVC · Feb 10, 2026 · riotimesonline created with TradingView USD/COP - Daily Chart U.S. Dollar / Colombian Peso · Daily · ICE · Feb 10, 2026 · riotimesonline created with TradingView Market Commentary

The January CPI print at 5.35% has now set the stage for what could be a prolonged tightening cycle. With inflation rising instead of falling - defying the trajectory that many had expected after the 2023-2024 disinflation - BanRep faces an increasingly uncomfortable policy dilemma. The central bank's own 2026 year-end inflation forecast of 6.3% suggests prices could get worse before they get better, while Itaú's projection of 6.7% implies the hiking cycle may not be over.

The inflationary pressures are structurally entrenched. President Petro's 23.7% minimum wage hike - the largest real increase in two decades - is filtering through to service-sector prices, particularly in restaurants and hotels (up 9% YoY). The January introduction of a 10% VAT on gasoline and diesel, a prelude to full alignment at the 19% general rate, adds further cost-push pressure. And the reduction in the legal workweek to 42 hours from July 2026 will effectively boost hourly labor costs by 28.5%.

For equities, the COLCAP's recovery above 2,396 is encouraging but fragile. The index remains roughly 3% below its all-time high of 2,469.50, and the weekly RSI at 77.45 warns that the broader overbought condition has not been resolved. The rate shock has fundamentally altered the valuation calculus - higher discount rates compress the bank-heavy index, while elevated borrowing costs threaten the consumer spending recovery that drove the 97% rally from 2023 lows.

The peso's story remains distinctly different. At COP 3,672, the currency benefits from Colombia's 10.25% policy rate - one of the highest real rates in emerging markets - in a global environment where the dollar is weakening. The DXY has fallen more than 10% from its early-2025 highs, and the Fed's nomination of Kevin Warsh as chair has added further uncertainty about the path of US monetary policy. The rate differential (10.25% vs US 3.50-3.75%) continues to make peso carry trades attractive.

Oil prices offered a modest tailwind, with Brent crude rising to $68.98 on renewed US-Iran tensions despite progress in talks. The energy complex remains volatile - the EIA forecasts Brent averaging just $56/barrel for 2026 - and any sustained decline in crude prices would pressure Colombia's fiscal accounts and current account deficit, potentially unwinding some of the peso's gains.

Technical Outlook

COLCAP Key Levels

Level	Price	Significance
R3	2,500.68	Weekly upper Bollinger Band / psychological
R2	2,437.03	4H resistance (recent swing high)
R1	2,418.54	Daily upper Bollinger Band
Current	2,396.01	Current price (+1.09%)
S1	2,370.14	Ichimoku conversion line (daily)
S2	2,314.19	Daily Ichimoku base / prior support
S3	2,248.02	20-week MA / major support zone

USD/COP Key Levels

Level	Rate	Significance
R3	3,921.4	200-day MA (major resistance)
R2	3,774.8	Upper Bollinger Band (daily)
R1	3,711.9	4H upper range / Ichimoku cloud base
Current	3,672.1	Current price (+0.14% weekly)
S1	3,651.9	Lower 4H Bollinger / recent swing low
S2	3,611.8	Weekly lower Bollinger Band
S3	3,591.6	2026 low (52-week low)

COLCAP technicals: The daily RSI at 72.49 remains in overbought territory, consistent with the extended bull run from 1,200 in late 2023. The MACD histogram on the daily chart has turned negative (-21.60) as the signal lines diverge, a classic momentum divergence that typically precedes further consolidation or a pullback.

On the 4-hour chart, the RSI sits at a more neutral 50.63, with the MACD showing mild negative divergence (-2.77 signal, -11.73 histogram). Price is trading above the Ichimoku cloud on all timeframes, maintaining the bullish structure, but the weekly candle - now printing at the 77.45 RSI level - is deep into overbought territory and has historically preceded corrections of 5-10%.

The 200-day MA sits far below at ~1,894.71, confirming the long-term uptrend remains firmly intact even if a meaningful correction materializes. The key level to watch is the 2,314 Ichimoku support from last week - holding above it keeps the recovery narrative alive, while a break below reopens the path toward the 2,248 zone where the 20-week MA provides major support.

USD/COP technicals: The daily RSI at 49.05 is perfectly neutral, reflecting the pair's consolidation after its six-month peso strengthening trend.

The MACD on the daily is mildly bearish (signal at -15.9, histogram at -23.0) but the blue line at 7.1 is attempting a crossover, suggesting the dollar may be finding a near-term floor. On the 4-hour chart, RSI at 55.68 with positive MACD (+4.8 signal, +6.3 histogram) points to modest short-term dollar recovery potential.

Price trades well below the Ichimoku cloud and the 200-day MA at 3,921.4 on the daily, confirming the dominant peso-strength trend. The weekly RSI at 36.34 is approaching oversold territory for the dollar - a level that has historically preceded at least temporary USD/COP bounces of 2-3%.

The pair is near the lower Bollinger Band on the weekly chart (3,611.8), adding to the technical case for a short-term consolidation before any further peso appreciation.

Looking Ahead

This week's catalysts extend well beyond Colombian borders. The US January CPI data - scheduled for release on Wednesday, February 11 (or possibly delayed to February 13 due to BLS scheduling changes) - is the single most important event for global risk appetite and EM capital flows.

Markets expect US inflation at 2.9% YoY, and any upside surprise would strengthen the dollar and pressure the peso, while a soft print would reinforce the Fed 's dovish trajectory and accelerate peso carry-trade inflows.

The US-Iran nuclear talks continue this week in Oman, with both sides describing last Friday's discussions as productive. President Trump has warned of "severe consequences" if no deal is reached, while Tehran insists on maintaining uranium enrichment.

Oil prices remain the key transmission mechanism for Colombia - Brent at $68.98 is well above the EIA's 2026 average forecast of $56, but any de-escalation premium evaporating could pressure crude lower and weigh on Colombia's fiscal position.

Domestically, the countdown to the March 8 legislative elections and presidential primaries is entering its final month. The right's consolidation under the "Great Consultation for Colombia" - with Paloma Valencia and Vicky Dávila as frontrunners - contrasts with the left's fragmented primary following Iván Cepeda's exclusion. Market participants are watching whether the campaign rhetoric introduces fiscal uncertainty or policy surprises that could widen risk premiums.

For the COLCAP, the 2,418 daily upper Bollinger Band is the near-term resistance to reclaim for a retest of the all-time highs. The 2,370-2,314 zone remains the support corridor - a break below 2,314 would signal the correction has further to run.

For USD/COP, the 3,712 Ichimoku cloud base on the 4-hour chart is the key resistance; a break above would mark the first serious challenge to the peso's dominance in months. Conversely, a break below 3,651 would open the path toward the 2026 low of 3,591.6.

Verdict

The equity-currency divergence identified last week remains the defining theme - and January's inflation print has intensified it. A 5.35% CPI reading, accelerating from 5.10%, validates BanRep's hawkish shock and keeps the door open for further hikes.

This is simultaneously bearish for the COLCAP (higher rates = lower valuations, weaker consumption) and bullish for the peso (higher carry = stronger inflows).

The COLCAP's rebound above 2,396 is a constructive sign, but the weekly RSI at 77.45 and the negative daily MACD histogram suggest this is a corrective bounce within a developing pullback - not the start of a new leg higher.

The all-time high of 2,469.50 is unlikely to be retested until the market has clarity on BanRep's next move and the outcome of the March 8 elections. The 2,314-2,248 zone remains the logical landing area if selling resumes.

The peso, however, has wind at its back from multiple directions: a weakening dollar (DXY at 97, down 10% YoY), the highest real rates in EM, and the Trump-Petro diplomatic normalization.

The weekly RSI at 36.34 on USD/COP warns of oversold conditions that could trigger a temporary bounce, but the medium-term trend remains firmly in the peso's favor.

The resolution hinges on two data points: tomorrow's US CPI (which will set the tone for the dollar and global EM flows) and Colombia's next BanRep decision (which will determine whether the hiking cycle extends).

If both surprises go hawkish - higher US and Colombian inflation - the divergence widens further: more pain for equities, more support for the peso. That remains the base case.

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