Colombian Markets Brush Off War Talk As Peso Firms And Stocks Hit Records

Key Points

1. Peso near 3,840 per dollar despite invasion rhetoric and fiscal battles in Bogotá.
2. COLCAP keeps hitting records, led by utilities and fuel distributors, with strong foreign buying.
3. Technicals show overbought equities and only a corrective USD/COP bounce; rich real yields support the peso.

Political drama is colliding with a market that looks through the noise: on Tuesday the peso firmed to the low-3,830s before settling around 3,840, even as the US Dollar Index edged above 99 and investors positioned for the Federal Reserve’s rate decision.

Traders say a brief spike in USD/COP above 3,800 reflected political jitters, but the move faded as high carry drew buyers back.

With inflation easing toward the mid-5s and the policy rate near 9.25 percent, Colombia offers some of the richest real yields in emerging markets, cushioning against global dollar swings.

Equities are even more exuberant. The COLCAP added 0.5 percent to about 2,121 points, its latest record after a steady climb this year.

Leading winners included grid operator ISA and fuel marketer Terpel, both up around 1.7 percent, and Grupo Cibest, up 1.5 percent at a fresh high.

Among the laggards, preferred shares in Davivienda fell 2.5 percent, while Bancolombia and Sura preferred lines dropped just over 2 percent and 1.5 percent respectively.

Behind the resilience sits a simple equation. Trump’s suggestion that US forces might one day hit cartels in Mexico, Colombia or Venezuela is treated as distant tail risk rather than a trading scenario.

At home, the Senate’s rejection of President Gustavo Petro’s latest tax package deepens long-term fiscal worries but reassures investors that Congress and the courts can still block the administration’s more aggressive economic ideas.

Charts tell a similar story. On four-hour charts, USD/COP has turned up with positive MACD and a firmer RSI, signalling a short squeeze in the dollar, while daily and weekly charts still show a downtrend from levels above 4,300 earlier this year.

The COLCAP, by contrast, looks stretched on both daily and weekly gauges, hugging the top of its Bollinger bands. For now global investors prefer to ride a high-yield, institution-buffered story rather than trade the headlines.

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