Peso Firms As Dollar Softens While Colombia’s Stock Rally Pauses

Key Points

• Dollar slips after Fed cut, leaving the peso slightly stronger around 3,850 per US$ and volatility expectations still elevated.
• Colcap eases 0.18% after fresh records, with financials and cement names among the day’s biggest movers.
• Markets balance high domestic rates and improving inflation against fiscal worries and unease over the government’s economic agenda.

The latest move in Colombian assets is being driven from abroad. After the US Federal Reserve delivered a third rate cut this year, taking the federal funds range down to 3.50–3.75%, the Dollar Index retreated toward the high-98s, its weakest level since October.

That softer greenback helped the peso trade early Thursday near 3,854 per dollar, a touch firmer than Wednesday’s official TRM around 3,861, and comfortably inside this week’s 3,827–3,875 band.

Local fundamentals, however, are doing as much to shape the trade as the Fed. Banco de la República has left its policy rate parked at 9.25% since May and, in recent minutes and speeches, underlined that inflation near 5.3% is still far from its 3% goal.

The high real yield keeps carry traders interested, but it also reflects skepticism about fiscal policy and about an interventionist tilt in parts of President Gustavo Petro’s program, which many investors see as a structural headwind. Volatility gauges now rank the peso among the most unstable major emerging-market currencies.

On the charts, USD/COP’s 4-hour candles show a tight consolidation around 3,830–3,860, with RSI just under 60 and MACD turning up, hinting at modest dollar strength in the short term.

The daily picture suggests a controlled rebound from late-November lows near 3,730, but the weekly trend still points to a gradual dollar decline, leaving 3,800 as first strong support and the 3,900–3,960 area as resistance.

Equities are telling a slightly different story. The MSCI Colcap dipped 0.18% on Wednesday to 2,119.71, just off a record close the day before and still more than 50% higher than a year ago.

Banco AV Villas led the winners with a 41% jump, followed by Cementos Argos preferred (+4.1%), Bolsa Mercantil de Colombia (+2.0%), Grupo Sura preferred (+1.8%) and Grupo Sura common (+1.4%).

The main laggards were Fabricato (-3.1%), Ecopetrol (-2.1%), Grupo Argos (-1.4%), Empresa de Energía de Bogotá (-1.3%) and Grupo Argos preferred (-1.2%).

Technically, the index remains in a powerful uptrend: weekly RSI is deep in overbought territory, while daily indicators show momentum flattening rather than reversing.

For now, Colombia offers a mix that market-friendly investors like—high carry, cheap stocks and some reform fatigue in Bogotá—yet it is also a market where any new fiscal or regulatory shock from the left of the spectrum could trigger a sharper correction than in calmer years.

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