Colombia’s Calm-Looking Markets, And The Tension Underneath

Colombia woke up to a strangely quiet tape. The peso hovered near 3,875 per dollar on Tuesday morning, almost exactly where the central bank’s reference rate sits.

Stocks, by contrast, were still nursing a bruise: the Colcap fell 1.39% Monday to 1,897. The global backdrop offered little help— the dollar index idled in the high-98s and Brent crude held around $61, a soft level for an oil-exporting economy.

The headline story is simple: politics met commodities. After Donald Trump publicly accused President Gustavo Petro of drug ties and floated tariffs—charges Bogotá rejects—the government recalled its ambassador to Washington.

Actual trade measures have not followed, but the rhetoric alone was enough to widen Colombia’s risk premium, knocking equities and lifting intraday volatility in FX.

The story behind the story is what matters for outsiders. Colombia’s markets are unusually sensitive to two levers it doesn’t fully control. First, oil: Ecopetrol and the broader economy still lean on crude revenues.

When the oil curve slips into contango and prices drift near $61, investors infer weaker cash flows and a less comfortable external balance.

Second, the dollar: a steady dollar index keeps a ceiling on how far the peso can rally, even when local carry is attractive. Colombia’s central bank holds its policy rate at 9.25%, which supports the currency, but that support fades if oil sags or Washington headlines escalate.

Technically, both markets are at decision points. USD/COP shows intraday stabilization but faces resistance near 3,913–3,917 and support around 3,856–3,853. The Colcap’s medium-trend remains constructive, yet momentum faltered; watch 1,915–1,920 on the upside and 1,883 below.

What to watch next: any concrete detail on tariffs; oil inventory signals that could shift the supply narrative; and the dollar’s tone.

The simplest way to read Colombia right now is this—carry keeps the peso afloat, politics and oil keep it from sailing. Until one of those forces clearly breaks, expect rallies to be cautious and dips to be prodded rather than embraced.