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COLOMBIA: Oil Bounce Buoys Peso, Despite Fitch Fiscal Concerns

COLOMBIA
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  • The Colombian peso has outperformed today, gaining by 0.8% against the dollar, as it has benefitted from the 4% rebound in oil prices. The move in USDCOP back below 4200 has come despite some cautious comments from Fitch regarding the fiscal outlook, noting that the government has lost some of its fiscal credibility as the fiscal deficit is seen coming in at 5.6% of GDP this year.
  • Speaking at an event in Bogota today, Fitch analysts said that they could take negative credit action if high deficits persist, debt to GDP continues to grow or if there’s a significant divergence from peers. In addition, economic growth below 3% and closer to 2% could also be credit negative. Fitch sees the economy growing 2% this year and 2.8% next, rising to 3% in 2026.
  • Economic activity data for August due next week will be closely watched, particularly given the potential for BanRep to accelerate its easing cycle later this month.
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  • The Colombian peso has outperformed today, gaining by 0.8% against the dollar, as it has benefitted from the 4% rebound in oil prices. The move in USDCOP back below 4200 has come despite some cautious comments from Fitch regarding the fiscal outlook, noting that the government has lost some of its fiscal credibility as the fiscal deficit is seen coming in at 5.6% of GDP this year.
  • Speaking at an event in Bogota today, Fitch analysts said that they could take negative credit action if high deficits persist, debt to GDP continues to grow or if there’s a significant divergence from peers. In addition, economic growth below 3% and closer to 2% could also be credit negative. Fitch sees the economy growing 2% this year and 2.8% next, rising to 3% in 2026.
  • Economic activity data for August due next week will be closely watched, particularly given the potential for BanRep to accelerate its easing cycle later this month.