BBVA Recommends Shorting Colombia’s Peso Ahead of 2026 Election
Colombia Banrep peso pressure intensified on Tuesday, May 5, 2026, after BBVA’s strategy team led by Alejandro Cuadrado recommended that clients take a short position on the Colombian peso through three-month dollar-call options at strike prices around 3,750 and 4,000 pesos per dollar, citing fiscal deterioration and the lead-up to the May 2026 election.
The recommendation followed Banco de la República’s unanimous decision on April 30 to hold the policy rate at 11.25 percent, against expectations of a further 50 to 75 basis-point increase. The decision triggered a 2.95 percent weekly devaluation of the peso to a 3,707 close on Monday, with the platform Finxard ranking it the world’s second most devalued currency last week.
Key Points
— BBVA on May 5 recommended shorting the Colombian peso via dollar-call options at 3,750 and 4,000 strike levels.
— Banrep held the policy rate at 11.25 percent on April 30 by unanimous vote, after a March 31 hike of 100 basis points.
— The peso closed at 3,707 on Monday May 4, 2.95 percent weaker for the week.
— Finance Minister Germán Ávila walked out of the Banrep meeting in protest at the March 31 hike.
— Credicorp warns the May 2026 election is a “binary” event for the FX market, recalling the 2022 jump from 3,800 to 5,200.
What BBVA Recommended
The Rio Times, the Latin American financial news outlet, reports that BBVA’s strategy team published the call on Tuesday morning. The bank framed the trade around an increasingly asymmetric risk profile for the peso, with three-month dollar-call options layered between 3,750 and 4,000 pesos per dollar. “We suggest a short COP exposure given the growing asymmetry of the risk profile and the potential for a significant USDCOP rally,” the team wrote.
The bank acknowledged that Brent’s recent rise to about 114.40 dollars per barrel could continue to support the peso in the near term but said the political and fiscal channels outweigh the commodity tailwind. Credicorp added that the Iván Cepeda, Paloma Valencia and Abelardo de la Espriella race makes the FX market binary, comparable to 2022 when the peso jumped from 3,800 to roughly 5,200 between the second round and Petro’s inauguration.
The Banrep Decision
Banrep’s seven-member board voted unanimously on April 30 to hold at 11.25 percent, an unusual cohesion after months of internal divisions. Aval Casa de Bolsa’s Juan David Ballén said the unanimity reflected directors who had wanted further hikes ceding ground, alongside those pushing for cuts. The previous March 31 meeting had raised the rate by 100 basis points by majority vote, prompting Finance Minister Germán Ávila to walk out and Petro to declare a “rupture of relations” with the central bank.
Live Market IntelligenceBrazil — Live Market Board
Rio Times · Live Market Intelligence
Brazil — Live Market Board
-0.21%
171,133
-0.21%
67,955
+1.46%
10,923
+1.70%
3,352,708
-0.01%
2,386.78
+1.53%
56,321.11
+7.67%
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 171,133 | -0.21% | +24.19% | 171,497 | 172,545 | 169,993 | — |
| USD/BRL | 5.06 | +0.02% | -8.58% | 5.06 | 5.06 | 5.06 | — |
| SELIC | 14.50% | — | — | — | — | — | |
| PETR4 | 41.18 | +0.00% | +29.70% | 41.18 | 41.53 | 40.82 | 34,024,700 |
| VALE3 | 79.17 | +0.00% | +49.86% | 79.17 | 79.80 | 78.13 | 12,104,500 |
| ITUB4 | 40.60 | +0.00% | +14.23% | 40.60 | 41.12 | 40.11 | 30,645,500 |
| BBDC4 | 17.80 | +0.68% | +8.01% | 17.68 | 17.99 | 17.48 | 22,070,500 |
| BBAS3 | 19.46 | +0.26% | -9.15% | 19.41 | 19.66 | 19.22 | 13,741,700 |
| B3SA3 | 15.23 | -1.36% | +17.33% | 15.44 | 15.58 | 15.13 | 46,559,500 |
| ABEV3 | 16.61 | -0.18% | +20.36% | 16.64 | 16.77 | 16.44 | 14,295,400 |
| WEGE3 | 42.61 | +0.00% | +0.83% | 42.61 | 43.23 | 41.86 | 5,021,600 |
| PRIO3 | 61.34 | +0.00% | +41.93% | 61.34 | 61.71 | 60.05 | 6,470,100 |
| SUZB3 | 41.52 | +0.56% | -21.59% | 41.29 | 41.87 | 41.00 | 3,068,100 |
| RENT3 | 40.70 | -0.25% | -8.46% | 40.80 | 41.26 | 40.13 | 8,442,300 |
| AZZA3 | 17.19 | -1.83% | -59.56% | 17.51 | 17.80 | 17.11 | 2,038,700 |
| CSNA3 | 6.05 | +0.67% | -27.02% | 6.01 | 6.16 | 5.94 | 11,023,900 |
| GGBR4 | 23.88 | +0.00% | +41.13% | 23.88 | 24.11 | 23.52 | 9,298,700 |
| ENEV3 | 24.54 | +0.57% | +79.25% | 24.40 | 24.83 | 23.99 | 5,879,000 |
Why It Matters for the Election Cycle
Anif president José Ignacio López argued on X that the government’s confrontational posture toward the central bank had undermined trust in the April 30 hold itself, which he said could otherwise have been justified on technical grounds. The dispute draws all major candidates into a defence of central bank autonomy: Iván Cepeda anchors the left as Petro’s continuity bet, while Paloma Valencia of Centro Democrático and lawyer Abelardo de la Espriella compete on the right. Sergio Fajardo and former senator Clara López have also weighed in.
For markets, the immediate test is whether the unanimous April 30 hold restores cohesion or whether a further peso slide forces additional action. The dollar opened May 4 at 3,680 pesos and traded between 3,674 and 3,730 before closing at 3,707, with 1.59 billion dollars changing hands across 1,935 transactions. Bancolombia attributed the pop to a 0.3 percent global dollar gain plus a 5.8 percent jump in Brent to 114.40, alongside the rate decision.
| Indicator | Value |
|---|---|
| Banrep policy rate (April 30 hold) | 11.25% |
| USDCOP close May 4 | 3,707 |
| Weekly peso devaluation | 2.95% |
| BBVA target levels (3-month) | 3,750 / 4,000 |
| Brent (Colombian benchmark) | USD 114.40 / bbl |
| Q1 export change YoY | +15.5% to USD 13.81B |
| 2022 election precedent | USD/COP from 3,800 to 5,200 |
How the Macro Picture Frames the Trade
Q1 exports rose 15.5 percent year-on-year to 13.81 billion dollars, driven by oil, coal and gold despite Petro’s hostility toward the extractive sectors. Headline inflation was 5.1 percent at end-2025, and Banrep’s January 2026 Monetary Policy Report flagged a fresh upward bias for 2026 due to the historically large minimum-wage increase. The board reaffirmed the 3 percent target and said the policy stance still supports the recovery without compromising disinflation.
A new regulation capping AFP pension fund investment abroad at 35 percent over three years could reduce structural dollar demand and act as an offset. Credicorp argues the AFP rule provides a partial anchor below 4,000 pesos against the political binary, while Global66’s Rodrigo Lama notes Brent above 100 dollars and a closed Strait of Hormuz episode keep the regional dollar firm.
Connected Coverage
For broader context, see our coverage of Argentina’s Cavallo, Milei and Caputo public feud over FX policy and our analysis of Trump’s pause of Project Freedom in the Strait of Hormuz.
What Happens Next
- Banrep minutes: Expected mid-May, with watch on whether the unanimous April 30 hold extends to the next meeting.
- April CPI: DANE releases later this month; consensus around 5 percent, up from late-2025 levels.
- Election cycle: First round in May 2026 will determine whether BBVA’s three-month put structure pays.
Frequently Asked Questions
Why is Colombia Banrep peso pressure rising?
Colombia Banrep peso pressure rises because the central bank’s April 30 unanimous hold at 11.25 percent followed a confrontation with the Petro government and a 100 basis point hike on March 31 that prompted Finance Minister Germán Ávila to walk out. BBVA recommended shorting the peso on May 5, citing fiscal slippage and election risk. The peso closed Monday at 3,707, 2.95 percent weaker for the week, ranked the world’s second most devalued.
What is the BBVA recommendation?
BBVA’s strategy team led by Alejandro Cuadrado on May 5 told clients to take a short COP exposure through three-month dollar-call options at strike levels of 3,750 and 4,000. The bank flagged a fiscal “bomb” and the May 2026 first-round election as the principal risks, framed as an asymmetric profile. BBVA acknowledged that Brent at 114.40 dollars per barrel offers a near-term offset.
How is Petro responding?
Gustavo Petro declared a public “rupture of relations” with Banrep after the March 31 hike, accusing the board of acting as an electoral instrument against his government. Finance Minister Germán Ávila walked out of that meeting, and former senator Gustavo Bolívar called the decision “vengeance, not technical.” Anif’s José Ignacio López and former minister Juan Fernando Cristo defended Banrep autonomy. Credicorp called the May 2026 election binary for the FX market.
What is the 2022 precedent?
In 2022, the Colombian peso jumped from 3,800 to about 5,200 per dollar between the second-round vote and Petro’s August inauguration, a roughly 37 percent depreciation in about three months. Credicorp cites this as a benchmark for the binary FX risk in 2026. The 2026 peso has appreciated 1.50 percent year-to-date through May, the seventh-best LATAM currency, leaving room for reversal under a left-wing-continuity outcome.
Updated: 2026-05-06T10:30:00Z by Rio Times Editorial Desk
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