The Colombian peso once again became the protagonist in regional markets during September, after in the midst of an international scenario dominated by the volatility of interest rates and the fall in oil prices, the local currency appreciated 2.5% in the month and closed at $3,917 per dollar, consolidating itself as one of the strongest currencies in Latin America.
All, according to experts, in a context of extraordinary foreign currency flows and a downward trend in the global dollar, which gave an additional boost to the Colombian exchange market.
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According to the most recent Bancolombia report, the strengthening of the peso respondedin large part, to the monetization of US$1.7 billion by the Ministry of Finance, resources from financial operations known as Total Return Swap (TRS). These operations, which involve the exchange of future returns on financial assets, generated a significant influx of dollars into the country and put downward pressure on the exchange rate.
The report highlights that, throughout the month, the market recorded record levels of trading, with an average daily volume of more than US$2,000 million and a historical peak of US$2,278 million on September 23, the second highest since 2022. Between the 5th and 8th of that month, the movement reached US$11,400 million, driven by net sales from foreigners and official monetizations.
The local currency market has been strong despite fiscal threats.
Image from ChatGPT
Despite this scenario of strength, analysts warn that it is not a structural phenomenon, but rather a transitory behavior associated with specific flows and specific decisions of the Government, warning that “the space for new official dollar sales is limited” and that this It implies that the peso could stabilize or even reverse part of its advance in the coming months.
The international environment has also played a determining role, since while the United States Federal Reserve resumed the cycle of rate cuts, reducing its target range to 4% – 4.25% and anticipating two additional movements before the end of the year, the Bank of the Republic opted for prudence and maintained its rate at 9.25%, after a divided vote on its board.
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This difference in monetary policies has favored the entry of capital into the country and strengthened the attractiveness of the peso against other emerging currencies, a phenomenon known as carry trade. However, Bancolombia emphasizes that not all the wind blows in favor.
The persistence of internal fiscal pressures, added to global uncertainty and the beginning of the 2026 electoral calendar, could add volatility to the exchange market; Therefore, in its analysis, Bancolombia projects that the USDCOP will move between $3,850 and $4,050 during October, with a general trend of stability, but with risks of rebound if external shocks materialize or fiscal accounts deteriorate.
The local currency market has been strong despite fiscal threats.
Image from ChatGPT
Other commodities
On the raw materials front, the report details that Brent oil fell 1.6% and closed at US$67.1 per barrel, affected by the increase in OPEC supply and the slowdown in global demand after the summer season in the northern hemisphere. In contrast, gold reached a new historical high of US$3,840 per ounce, with a monthly advance of 10.6%, driven by expectations of further rate cuts from the Fed.
In technical terms, Bancolombia maintains a moderately optimistic vision for the short term, supported by external fundamentals and the rate differential, which continues to be one of the most attractive in the region. However, the report emphasizes that fiscal discipline and macroeconomic stability will continue to be decisive factors in sustaining confidence in the peso.
DANIEL HERNÁNDEZ NARANJO
Portfolio Journalist
