The Colombian peso strengthened 115 pesos against the US dollar last week to close at $3,335.46 COP, a 3.35 percent weekly appreciation that Grupo Cibest’s economic research team attributed to a weaker US dollar globally and to a larger-than-expected interest-rate increase at home. In its July 6 weekly report, Radar Bancolombia, the research unit of Bancolombia argued that the currency now trades well below the level its fundamentals would justify.

The Junta Directiva del Banco de la República (the central bank’s board of directors) raised its benchmark policy rate by 75 basis points to 12.00 percent, its highest level since March 2024, surprising a market that had priced in a 50-basis-point move. Even so, the bank argued that a rate consistent with Colombia’s macroeconomic and fiscal conditions should push the exchange rate toward a range between $3,400 and $3,650 COP.

What is moving the peso?

To isolate the drivers of the currency, the research team estimated a structural vector autoregression (SVAR) model that breaks the annual change in the market representative exchange rate (TRM) into international factors, local factors, exchange-rate dynamics and a speculative gap. The exercise found that during 2026 local factors have gained prominence and now explain close to half of the peso’s movements.

In June, Colombia’s sovereign risk premium corrected sharply, reflecting an improved perception of country risk tied to the coming change of administration. The nation’s five-year credit default swaps fell 69 basis points from the first round of the presidential vote — a 29 percent annual decline in June — and now sit about 24 basis points below the level the bank considers consistent with fair value. Among regional peers, Colombia’s policy rate is exceeded only by Brazil’s 14.25 percent, which the bank said keeps carry-trade strategies attractive.

The chart shows how the Colombian peso and the US dollar has detached from the fair value rate of the government. Chart by Finance Colombia.

Measured against where it should trade if it merely tracked its peer currencies and incorporated the deterioration in external fundamentals, the exchange rate should stand near $3,720 COP, Bancolombia estimated. The bank placed the currency’s fair value in a range between $3,710 and $3,880 COP, and noted that the United States economy has shown resilience, backed by technology investment, while inflationary pressures continue to limit the room for maneuver of the US Federal Reserve.

From September 2025, the observed rate detached significantly from that fair value. The bank linked the move first to monetization by the Ministerio de Hacienda (Finance Ministry) — foreign-currency sales of roughly $9 billion USD between September and December, against average daily spot volume of about $1,337 million USD in 2026 — and later to optimism over the change of administration. Those operations drew on a Total Return Swap, new euro-denominated bond issues and a direct placement to Pimco of $23 trillion COP, which raised about $5 billion USD. The gap against peer currencies turned negative after the first-round vote and has since averaged -$225 COP.

The bank described the pattern as a trade electoral — a repricing of Colombian assets in anticipation of a more market-friendly government — that held through much of the second half of 2025 and into 2026, interrupted only when polls showed a wider gap among the presidential candidates.

Bancolombia expects the peso to stay stronger than its fundamentals over the coming months, but not indefinitely. The bank projected the exchange rate in a range between $3,400 and $3,650 COP for the second half of 2026, converging gradually toward fair value in 2027. As long as the local interest-rate cycle keeps favoring long-peso carry positions and optimism persists, the bank said, the peso could reach the lower bound of that range.

“A persistent deviation looks unlikely, since over the long run the exchange rate has not structurally departed from the level observed in its peers.” — Grupo Cibest economic research, Radar Bancolombia

On the external side, the bank flagged persistent pressure toward depreciation from falling international oil prices and limited room for further US dollar weakness. Brent crude, which rose 5.8 percent year over year in the first quarter and 51.2 percent in the second amid the Middle East conflict, had already fallen 26 percent from a peak near $118 USD per barrel to around $72 USD. The bank cautioned that sustaining the currency’s current strength would depend on credible fiscal consolidation, given challenges related to inflation, the El Niño phenomenon, weak investment, the health system, security conditions and the lag in strategic sectors such as mining, energy and construction.

International backdrop

The US unemployment rate fell 0.1 percentage point to 4.2 percent in June, its lowest in a year, the Bureau of Labor Statistics reported, though the economy added just 57,000 jobs, below the 114,000 analysts expected. Hiring concentrated in professional services, up 36,000, social assistance, up 25,000, and health, up 22,000, while lodging shed 61,000. The labor participation rate fell 0.3 percentage point to 61.5 percent, its lowest since March 2021, as 720,000 people left the labor force.

Eurozone inflation eased 0.4 percentage point to 2.8 percent in June, a three-month low and below the 3.0 percent consensus, though still a fourth month above the European Central Bank’s 2 percent target. Core inflation fell to 2.4 percent. In China, the composite purchasing managers’ index rose to 50.6, above the 50 threshold that separates expansion from contraction, with manufacturing at 50.3 and non-manufacturing at 50.2, while construction stayed in contraction.

Colombia’s economy

The Banco de la República resumed its tightening cycle, lifting the policy rate to its highest level since March 2024. Bancolombia expects a further 75-basis-point increase, to 12.75 percent, as inflation expectations drift higher. Consumer inflation was set to rise for a fourth straight month in June, to about 6.13 percent annually and its highest reading since July 2024, on the bank’s estimate of a 0.38 percent monthly gain; analysts polled by the central bank had expected 0.32 percent. Analysts see inflation ending 2026 near 6.52 percent, against the bank’s own 6.4 percent scenario.

Colombia’s national unemployment rate stood at 8.0 percent in May, down 1.04 percentage points from a year earlier and a record low for the month, according to the national statistics department (DANE). Informality was 54.2 percent, and the bank maintained its 9.0 percent urban unemployment projection for 2026. Business sentiment moved the other way: Fedesarrollo’s commercial confidence index fell to 20.5 points and its industrial confidence index to -2.9 points in May, which the bank tied to uncertainty around the presidential election.

Goods exports likely extended double-digit growth in May, to an estimated $5.46 billion USD FOB, up 25 percent year over year, led by non-traditional products — non-monetary gold, copper ores and flowers — and by oil sales at an average price near $107 USD. The bank noted a 37 percent accumulated drop in the first quarter and expected exports to stabilize following the normalization of the tariff dispute with Ecuador.

Fixed income and yields

The US Treasury curve steepened bearishly, with short-dated yields up about 8 basis points and long-dated yields up about 11, after Iran’s foreign minister said no direct US-Iran meetings were scheduled and after US Federal Reserve chair Kevin Warsh, speaking at the European Central Bank’s Sintra forum, reiterated the central bank’s commitment to its 2 percent inflation target. Citi’s economic surprise index held in positive territory for a sixth consecutive month at 57.8. Advanced-economy 10-year yields were mixed over the month, with Japan up 10 basis points and France up 3, against declines of 12 in Germany and the eurozone and 11 in the United Kingdom.

Colombia’s fixed-rate TES curve rallied, with yields down 22 basis points at the short end, 23 in the middle and 9 at the long end, supported by calmer Middle East conditions, the fall in the country’s five-year CDS to levels last seen in 2021, and announcements from the incoming government — among them, the report said, the naming of Miguel Gómez as finance minister. The cash balance of the Dirección del Tesoro Nacional (National Treasury) rose to an average of $20.7 trillion COP in June, up $5.6 trillion from May, or 1.16 percent of GDP. Tax collection grew 7.4 percent year over year in May, to $35.1 trillion COP, led by income tax at $15.3 trillion COP and internal value-added tax at $11.8 trillion COP, according to the tax authority (DIAN).

Commodities and equities

Gold rose to about $4,112 USD per ounce after the US jobs report, while Brent crude closed at $71.94 USD per barrel and West Texas Intermediate at $68.69 USD, little changed on the week as traffic through the Strait of Hormuz recovered and the Organization of the Petroleum Exporting Countries prepared to announce a production increase at its July 5 meeting.

The COLCAP index closed the week up 0.4 percent at 2,295.7 points. The biggest gainers were Cementos Argos (BVC: CEMARGOS, PFCEMARGOS), up 3.5 and 3.1 percent, and Grupo Cibest (NYSE: CIB; BVC: CIBEST), up 3.1 percent, while Davivienda (BVC: PFDAVVNDA), the PEI real estate vehicle and Grupo Nutresa (BVC: NUTRESA) led the declines. Grupo Nutresa launched a share-repurchase offer for up to 3,333,333 shares at $300,000 COP each, with an acceptance deadline of July 3. Davivienda placed $270.1 billion COP in the sixth tranche of its twelfth ordinary bond issuance, drawing offers of $343.99 billion COP.

The figure shows the change in the Colombian peso and how local and international factors seem to be affecting it in a negative direction. Chart created by Finance Colombia.

On Wall Street, the S&P 500 rose 1.8 percent, the Dow Jones 2.0 percent and the Nasdaq 2.1 percent, their best quarter in six years, led by semiconductor and artificial-intelligence infrastructure shares even as investors questioned the sustainability of those valuations. Tesla (NASDAQ: TSLA) lifted deliveries 25 percent year over year in the second quarter, and Lime (NASDAQ: LIME), the shared electric-bike and scooter operator, debuted on the Nasdaq with a $167 million USD raise and a valuation near $1.6 billion USD.

European indices advanced, with the Stoxx 600 up 2.7 percent, the DAX 4.5 percent, the CAC 40 1.5 percent, the FTSE 100 1.6 percent and the IBEX 35 2.2 percent, led by defense shares and with Siemens (XETRA: SIE) contributing to the DAX. KNDS postponed a planned Frankfurt and Paris listing, while Renk (XETRA: R3NK) agreed to acquire Britain’s David Brown Defence for about $200 million USD. In Asia, the Hang Seng rose 3.0 percent, the Nikkei 225 0.6 percent and the Shanghai Composite 0.4 percent; China Resources New Energy staged Asia’s largest listing so far in 2026, raising about $3,600 million USD in Shenzhen.

The full report, Fortaleza del peso colombiano bajo la lupa: entre el optimismo y sus fundamentales, was published by Grupo Cibest’s Dirección de Investigaciones Económicas, Sectoriales y de Mercado, led by Laura Clavijo.

Headline image description: The chart shows how the Colombian peso has depreciated significantly in comparison to other similar currencies in the market by a margin of 500 points. Chart created by Finance Colombia.

Of course, the plight of Gaza made the headlines because, in some small way, it has been reflected in local politics, with the polarization we have seen around the world appearing in Colombia. The extreme right have pinned themselves to Donald Trump & Benjamin Netanyahu from day one, the left and Gustavo Petro have made their thoughts very clear at the United Nations, whilst ANDI – Asociación Nacional de Empresarios de Colombia and big business, only seem to worry about the Pesos in their pockets. We already see them in the press asking for trade relations with Israel to be re-established immediately – given the historical fragility of the Middle East, perhaps there will be, rightfully, some wait and see.

This will be a big week for the 2026 budget as congress gets back to work after a well-earned holiday (for those not familiar with British sarcasm, this is an example). A couple of weeks ago, along with the tax reform, we seemed to have an agreement. However, these are rabid times in Colombian politics; we could get anything from ‘done’ to ‘lack of quorum’.

We will have the latest real sector data from the Departamento Administrativo Nacional de Estadística – DANE Colombia for August. The most recent figures for July were extremely strong, and analysts will be looking for more of the same. Whilst inflation’s stubbornness has kept overnight rates (9.25%) higher than anticipated at the outset of 2025, growth remains healthy. Bancolombia, in its most recent update, suggests the economy is moving into a more favorable stage, but of course with a wary eye on the deficit situation.

Amidst all this, the stock market remains in rude health despite concerns over the impact of Trumponomics on the US markets. The COLCAP may have dropped 1% on Friday, but it remains 35% (Peso) & 52% (Dollar Terms) higher YTD. Volumes are less than ideal, however, for local investors, it’s been a bumper year.

Finally, for this morning, gold. One of the abject failures of every single government this century is to capitalize on Colombia’s gold reserves. From Uribe to Santos to Duque to Petro, not one of them, or their respective ministers, has done enough to capitalize on an asset that could have paid so many of Colombia’s debts. Instead, there has been a lack of direction, and far too much of the production has fallen into the hands of illegal groups who are receiving the benefits of the increase in gold prices, which seems set to continue.

Have a wonderful week.

Regards.

Roops.

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Headline photo credit: erik_and_so_on from Pixabay.

If only others had acted in such a dignified manner.

Instead, far too many took it as an opportunity to draw the light of tragedy onto themselves. Some were in a passive-aggressive form that left little to the imagination regarding whom they wanted to blame. Some try to ‘take up the mantle’ of Miguel’s campaign, even though their views are far less conciliatory toward others. And finally, those who just came out and said it: ‘Miguel dead, Alvaro in prison, and a terrorist running the country’. It’s as despicable as it is, unsurprisingly, at a time when a family is trying to mourn its loss.

We will leave the subject there and the family in peace.

Elsewhere, and yes, life goes on, the ANDI – Asociación Nacional de Empresarios de Colombia is holding its annual gathering/cocktail party on the coast, and despite their call for the country to pull together at a difficult moment, President Gustavo Petro wasn’t invited, and the rest of the cabinet promptly cancelled. The reason offered up (in short) was that he didn’t appear when invited previously, etc. The ANDI has been critical of Petro’s reform process at every turn, whilst rarely offering alternative solutions, so whether he would have attended is open to debate – regardless, the behavior is unbecoming of either party.

There was positive news from Fedesarrollo as consumer confidence rose once again in July to 5.3% (June 2.2%) – a year ago it was -9%. This was reflected in June retail sales (+10.1%), which again were driven by vehicles, electronics, and domestic goods, a reflection of increasing domestic demand.

The real sector also fared well in June, with manufacturing production (+2.2%) rising for a second month, with 22/39 sectors in positive territory. Industrial production also rose 1.3% having fallen slightly in May.

The Departamento Administrativo Nacional de Estadística – DANE Colombia reported that overall Q2 civil works rose by 9% – there was, however, a 7% contraction in building construction for the same period. The overall picture is hard to read, but later today, Q2 GDP is due out (consensus 2.4%), which will give us a better idea of how this vital sector is faring.

The stock market continues to prosper. The bvc-Bolsa de Valores de Colombia S.A. COLCAP is now up 32% (local) & 44% (USD) YTD, volumes have even begun to tick upwards. Again, feel sorry for those badly advised to ship their cash to Miami to gain single-digit returns before costs.

Have a great day.

Regards Roops.

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The posthumous tribute in memory of Senator Miguel Uribe Turbay, honoring his legacy and service to Colombia. Photo credit: Canal Congreso Colombia/YouTube.

On this occasion, it is regarding the impact of El Niño.

Both water and energy are in short supply, and suddenly it needs to be the government’s fault. Reservoirs have fallen below 30% — approaching critical levels. While the weather is slowly turning more rainy, it’s not happening quickly enough.

Blaming the government is both pointless and inaccurate. If anything, El Niño has been milder than expected, so what were they meant to want about? Let’s not forget that months before the drought even started, Colombian President Gustavo Petro was trying to implement special measure to protect the worst impacted regions — and these measures were blocked by the courts.

Now, in order to save water and energy, today has been named a “Civic Day” in Colombia where effectively there is no obligation within the public sector to go to the office or study. It’s a drop in the bucket — or reservoir — but perhaps this is better than doing nothing during a crisis.

Every journalist is now a climate expert, producing articles about Colombia needing more solar power in order to produce counter-cyclical energy. This is very true, and Colombia has been disastrously slow in building out solar energy. But that isn’t on Petro. In fact, this is a government that have discussed green energy since the day they began, in the face of heavy criticism, while overseeing the highest oil production in eight years. Fortunately, solar farms are now starting to appear all across the country.

In economic news, Fedesarrollo released its April survey, which saw no change in the 2024 inflation estimate (5.51%) but an increase in year-end overnight interest rate expectations from 8.00%-8.25%, which doesn’t quite compute. Meanwhile, the organization’s GDP estimate was also unchanged, projecting growth of 1.3% in 2024 and 2.5% in 2025.

Estimating GDP is a tricky business. Last week, the the World Bank also lowered its 2024 estimate for Colombia to 1.3% (down from 1.8%), but they are now looking at growth of 3.2% for 2025. Meanwhile, this week the International Monetary Fund estimated 1.1% and 2.5% for the next two years, respectively. Of note: the IMF expects Venezuela to be the fastest-growing economy in the region at 4.0%, which can only be good for Colombia.

The real sector continues to struggle according to the National Administrative Department of Statistics (DANE). February saw retail sales (-1.8%) and manufacturing production (-2.2%) both struggle, much as expected. Interest rates may have begun to fall, but Banco de la República has yet to get the message fully across to the market and consumers.

The reform process is crawling forward. There have been advances on both the pension and education sides — but there’s still a distance to go.

Finally, the Colombian peso has been stable this week despite Middle East events, while the COLCAP is slipping after a good start to 2024. That said, volumes for the index are at least more healthy than they wore in 2023.

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The other issue is price. It would make far more sense, setting aside the geopolitical risk, to import very cheap gas from Venezuela, which is also desperate for the revenues. That option, however, at least for 2024, is under threat due to the urgent need for pipeline repairs.

It’s a complicated situation — and one that needs both a short and long-term solution. Opposition politicians have been taking shots at Ecopetrol CEO Ricardo Roa due to the drop in profits, but that has more to do with prices and the Colombian peso than operations, as production in 2023 was at an eight-year high.

In other news, while we have hardly discussed the equity market this year, it has been performing somewhat better of late — although volumes remain worrisome.

What is more concerning, though, is that amid all the celebratory noises related to the Madrid agreement and the resolution of the Gilinski/GEA situation, Nutresa will forthwith disappear from the COLCAP once the tender is complete. This follows on from Grupo Éxito, which after some positive vibes to the contrary has also suffered the same fate following the Grupo Calleja tender auction.

This is nothing new in Colombia. There has been a gradual reduction of listed names over the years with few new issuers.

It also nothing new that most market actors have lost faith in the Bolsa de Valores de Colombia, Asobolsa, and other entities entrusted with the guardianship of the market — as they have no idea what to do about the situation.

Last week, we had the Superfinanciera Colombia criticizing, rightfully, the banking sector for being too conservative in their lending — while they themselves appear to have completely forgotten what it is to approve and support new products for the capital markets.

That is made worse with the ongoing nuam exchange and the merger with Chile and Peru, which is (1) highly distracting, (2) still in the distant future, and (3) comes with no guarantees of success. Hopefully, the term “Emperor’s New Clothes” doesn’t need to be translated into Spanish.

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Banco de la República left interest rates at 13.25% (with 5-2 vote — and an angry Ministry of Finance), a terminal rate that needs to come down ASAP. The cut doesn’t need to be radical but at least signal that the easing cycle has begun.

As if to emphasize the ongoing damage, National Business Association of Colombia (ANDI) and FENALCO reported October car sales dropped 38.8% year-over-year. We await October inflation data next week, and if it is even slightly positive the central bank has to surely upgrade their November “gathering” meeting to a “decision” meeting (as opposed to waiting until December to cut rates).

The Fuel Price Stabilization Fund (FEPC) deficit (aka, fuel subsidies) will still exit 2023 at $5 billion USD — a $750 million USD increase that will eat all the tax reform gains. Diesel represents 80% of that deficit, and there will be a battle royale with transport companies in 2024 as diesel prices are set to rise.

National Administrative Department of Statistics (DANE) reported September unemployment data, and while year-over-year job creation dropped to 770,000, both the urban (9.6%) and national (9.3%) rates were the lowest for this month since 2016. Also, encouragingly, for the first time in years, unemployment for women fell (from 11.8% to 11.3%) and rose for men (from 7.4% to 7.7%).

EPM is a Medellín basket case and has become a political football — and should be privatized. It won’t be — as each and every Mayor uses it to their own ends — but there is some good news. After the near-catastrophic events of 2018 (when 115,000 people were put in imminent danger), it is finally, after a few billion extra dollars, coming on stream. Turbine 3 and 4 were activated last week and the 1,200 MW surge helped drive spot prices down from $1,479 to $371/kWh. And there is still more to come.

Also contributing to the price decrease (during a period when the experts initially said El Niño would have arrived by) are heavy rains, which have pushed reservoir levels to 72.8%, according to XM.

The central bank needs to take these factors into account. El Niño is one of the reasons (due to energy prices being so correlated to hydroelectric power) that the committee are worried about CPI. They need to file that concern under “unnecessary.”

The markets this week have been quiet.

The Colombian peso initially surged on local election results, but then gave that up after the FOMC comments following its decision to hold interest rates steady on Wednesday in the United States — before again looking at 4,000 to $1 USD once again yesterday.

On equities there was little, although we did have the data flow for October. Still, there were few radical moves. As the COLCAP dropped 2.9%, overseas funds were the largest volume participants (32.1% as they sold a net $14 million USD), while local brokers were the largest buyers.

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The MSCI Inc. COLCAP has continued to take up column inches with much procrastination and naval gazing, but in reality, no one seems to have a clue what to do — or worse still, no one seems to have no confidence in those who administer the capital markets: Superfinanciera Colombia, Bolsa de Valores de Colombia, Asobolsa. As for the market, well, there’s nothing to report — again.

The Colombian peso had another decent week as it moved towards 3,900 to the US dollar, and there appears little to suggest that events, foreign or domestic, will move it back towards the 4,200 level. Brent oil is underpinning this strength as it trades at recent highs.

All the more surprise then to see the headline “Cocaine to Overtake Oil as Top Export.” This was based on a report from Bloomberg and, setting aside the vagaries of the report, Thursday saw the IV Summit in Medellín on drugs, with fentanyl being a key subject, attended by President Gustavo Petro. One feels that, finally, after decades of denial by incumbent governments, we are finally going to see a pivot and a more open dialogue in terms of how to attack the drug business and to protect those consuming.

Reforms were in the news again, but there was little sparring. The education reform was presented and the initial feedback appears to positive.

The main macro data of the week from the DANE Colombia will be released later today in the shape of the Real Sector data for July (with no great optimism), while ready mixed concrete (RMC) production for July stood at 557.900 m3 — down 3.1% from 12 months ago

Fedesarrollo released the Consumer Confidence survey for August, and it was somewhat mixed. The headline number was down, from -17.4% to -18.8%. Barranquilla (-9.9%) remains the most confident city. And by economic group, the high income category (-45.5%) were the most pessimistic whilst medium income (-13.8%) gapped upwards to replace low income (-21%) as the most optimistic.

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Here’s a summary of some of the key areas.

GDP Growth

Colombian GDP for 2023 saw the outlook rise from 1.1% to 1.5%, moving closer to the estimates of overseas agencies. Once again — despite opinion polls declaring we are heading for Armageddon — we see various stakeholders increasing the GDP outlook while there was also a jump in consumer confidence last week. For 2024, which will depend greatly on the actual 2023 results, there was a small reduction in the GDP estimate, falling from 2.3% to 2.2%.

Inflation

CPI estimates for 2023 rose from 9.15% to 9.22%. For the 12-month forecast, it is expected to fall to 6.82%. All eyes will be on the June reading from DANE in a couple of weeks.

Interest Rates

There has been a slight cooling on the outlook for the overnight rate for year-end of 2023, from 12.0% to 11.75%, with a 12-month outlook of 9.5%. For this month, the Colombian central bank will leave rates at their 13.25% peak.

Colombian Peso

There has been a dramatic revaluation of the currency recently and that is reflected in the latest analyst estimates. The new year-end 2023 consensus is 4,300 pesos to the US dollar versus 4,600 a month ago. In reality the peso never deserved to be at 4,500+ level, so this is a welcome, more-rational view.

Equities

There is a renewed sense of positivity around the COLCAP, with 81.5% believing the market will rise over the next three months versus 69.2% a month ago. In terms of sectors, holdings companies are the preferred choice, in particular Grupo Argos. In terms of other names, ISA Interconexión Eléctrica and Nutresa, despite the uncertainty over the new Gilinski leadership, are also in demand.

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Other data was distinctly mixed. The Banco Davivienda PMI slipped into the red (49.9) during May versus the 52.6 recorded in April. On a much brighter note, the Q1 current account deficit stood at $3.4 billion USD versus the $4.4 billion USD expected — and down from $4.9 billion USD at the end of 2022.

Oil production continues to defy the August headlines that suggested the current administration and the Ministry of Mining and Energy was going to close down production. April production stood at 782,000 bpd, up 4% year–over-year, while year-to-date production is up 3.38% thus far — hardly the apocalypse some were predicting.

The Colombian peso continues to hang tough despite all the white noise around the leadership of President Gustavo Petro leadership — even despite poor oil prices over recent weeks. The reality is that there are multiple factors involved in the peso level — there always have been — and the Colombian economy is still doing just fine when compared to the region. The political blame game over the peso weakness over the past 12 months has little base in economic reality.

The reform process continues, but I am not going to take out too much time as there has been nothing new on the side of health reform, while both the labor and pension bills are still at Base Camp 1 with much climbing ahead.

We also saw disappointing news from Colombia’s poorest region, La Guajira, with Enel Group set to abandon its wind power project that aimed to provide power to 500,000 homes. Ostensibly, this is due to protests from the Wayuu indigenous peoples — which is a crying shame as they would have been one of the main beneficiaries. These are people who are nomadic and recognize no country, frontier, or authority. One wonders how much a lack of communication and education played a role in this dispute.

Colombia’s central bank, Banco de la República, this week made comments on inflation. It has now peaked, and within two years will be back at 3%, according to the central bank. Again, this begs the question, especially looking across the macro data: What did they see in April to raise rates to 13.25%?

The markets saw an MSCI Inc. rebalance give us at least one decent day of volume on the COLCAP, but aside from that it’s still a depressing picture. Much speculation remains over the future performance of Grupo Argos, Grupo SURA and Nutresa, they remain suspended for the meantime.

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The Central Bank has their non-decision meeting this week. They will sit down and discuss life but after the meeting we won’t know so much as to know if they had coffee or tea, or whether there were biscuits; at minimum there should be a press conference to get a feel for how they see the world.

All this is building up to February CPI at the end of the week…the folly of having a meeting where rates aren’t raised could be exposed. Analyst surveys are calling for a 13.25% terminal rate, versus the current 12.75%, that expectation is for March, but only because this week there is no full meeting.

January Unemployment will be released on Tuesday and there will be much interest after it came in much higher than expected (10.8%) in December. The IMF in a recent report suggested that at 11.1% Colombia would have the highest unemployment rate in the region in 2023. However, this needs to be put in context by the fact that over half of the working population is ‘off the books’ therefore accuracy is lacking.

On the markets the Peso had a bumpy week before recovering somewhat by Friday. Again the harbingers of doom are blaming it all on politics but in reality this is generally a bigger global picture. This applies to the equity market as well, it has underperformed but there are a plethora of reasons beyond the reforms. The latest ETF flow data tells us that we have had three straight weeks of equity and bond outflows from both Emerging Markets and Latin America – Chile, Peru and Mexico all had equally, or worse, weeks.

The COLCAP last week held above support levels with the results season in progress. Stock buy programs for Cementos Argos, Celsia and Grupo Argos certainly help.

Over the weekend Ecopetrol was in the headlines as they announced their latest reserves data – it has risen by 0.4% to just over 2 billion barrels which represents 8.4 years of supply. That particular stock will be keeping much more of an eye on the oil price which towards the end of last week was starting to show some signs of life.

Wishing you all a good week.

Roops

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