Colombia's Peso Surges on Strong Dollar Inflows and Election-Driven Confidence

The Colombian peso has seen a significant rally in 2026, appreciating by almost 23% against the US dollar. This reversal is a stark contrast to its sharp depreciation of nearly 5,000 pesos per dollar in late 2022.

Since then, the currency has gained roughly 38%, with the peso trading around 3,100 pesos per dollar in mid-September.

The appreciation has had both positive and negative effects. On one hand, it has lowered the peso cost of imported goods and foreign-currency debt, helping to contain some inflationary pressures. However, exporters and domestic manufacturers that earn dollars or compete with cheaper imports have seen their competitiveness squeezed.

The central bank attributes the currency's strength to several factors, including lower domestic risk aversion, higher oil prices, and an attractive interest-rate differential. Foreign investors have also increased their holdings of Colombian government bonds, contributing to the peso's rise.