MNI BRIEF: China To Support OBOR Via Foreign Exchange Reserves

MNI China Daily Summary: Friday, October 18

RPT-MNI POLICY: Weaker Yen Ups Dec Hike Chances But US Vote A Risk

MNI BRIEF: PBOC To Curb Challenges Of House And Equity Markets

MNI BRIEF: PBOC Launches CNY300bln Stock Buy-back Facility

MNI BRIEF: China To Approve More Securities Funds - NFRA

MNI: US SEP HOUSING STARTS 1.354M; PERMITS 1.428M

EZ/UK Bond Supply Calendar: IT, SL, EU, BE, BoE APF on Monday

MNI: EUROZONE AUG CONSTRUCTION OUTPUT +0.1% M/M, -2.5% Y/Y

CANADA: Politics Week: Trudeau Faces More Pressure To Resign

CANADA: Politics Week: Parliament Opens With Early Election Threats

AUSTRALIA: Albanese Lines Up Budget for May Election

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

COLOMBIA: HSBC Sees Medium-Term Threats To COP Increasing

COLOMBIA
BulletEM BulletEmerging Market News
  • HSBC sees risks building which could pose medium-term threats for the Colombian peso. Currently, they are only forecasting modest COP weakness in the quarters ahead, but they see the balance of risks tilting substantially to the downside for the peso. These include fiscal concerns, a reduction in potential growth, lingering reform uncertainty, risks to external accounts and the likelihood of a more dovish tone from the central bank.
  • Growing fiscal concerns have started to weigh on COP and will likely remain a headwind in the months ahead, as the government looks set to declare the 2025 budget by decree, which could prove worrying for investors as it's already underfunded. Meanwhile, lower potential growth and reduced export capacity may also weigh on the currency over the long term.
  • Even if BanRep doesn’t make a dovish shift imminently, the government will be able to replace two board members, most likely in Q1 2025, which could see the two most hawkish members, whose terms are ending, replaced. While HSBC’s forecasts suggest USDCOP will end the year near 4,200, they also expect the currency to underperform LatAm FX and believe risks are tilted to additional currency weakness going into 2025.
194 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
  • HSBC sees risks building which could pose medium-term threats for the Colombian peso. Currently, they are only forecasting modest COP weakness in the quarters ahead, but they see the balance of risks tilting substantially to the downside for the peso. These include fiscal concerns, a reduction in potential growth, lingering reform uncertainty, risks to external accounts and the likelihood of a more dovish tone from the central bank.
  • Growing fiscal concerns have started to weigh on COP and will likely remain a headwind in the months ahead, as the government looks set to declare the 2025 budget by decree, which could prove worrying for investors as it's already underfunded. Meanwhile, lower potential growth and reduced export capacity may also weigh on the currency over the long term.
  • Even if BanRep doesn’t make a dovish shift imminently, the government will be able to replace two board members, most likely in Q1 2025, which could see the two most hawkish members, whose terms are ending, replaced. While HSBC’s forecasts suggest USDCOP will end the year near 4,200, they also expect the currency to underperform LatAm FX and believe risks are tilted to additional currency weakness going into 2025.