Corficolombiana said that the outcome of the congressional elections and presidential consultations is expected to have a slightly negative effect on the financial markets and a moderate devaluation of the exchange rate is expectedin a context of high oil prices that would partially offset the pressures on the Colombian peso.
(Elections 2022: results of the Senate and House of Representatives).
The public debt market should not register significant devaluations, since we estimate that the current rates have already incorporated a good part of the political risk.
On balance, Corficolombiana says that it believes that the electoral results are slightly negative for the local financial markets. On the one hand, the new configuration of the Senate confirms a “turn to the left” in the legislature and may reinforce fears among investors that Colombia will abandon the orthodox management of macroeconomic policy, at a challenging time for the country’s fiscal and external accounts in which financing conditions are tightening and aversion to risk is increased by the conflict in Ukraine.
He says that, however, the emergence of Federico Gutiérrez as a viable rival to dispute the presidency with Gustavo Petro could configure a less adverse scenario compared to the one that investors have been discounting until before the elections.
(This is how the results of the inter-party consultations remained).
“Thus, we expect the exchange rate to react with a moderate devaluation today, in a context of high oil prices that would partially offset the pressures on the Colombian peso. The public debt market should not register significant devaluations, since we estimate that current interest rates have already incorporated a good part of the political risk”.
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