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COLOMBIA: USDCOP Rises 0.7% As Fiscal Risks Linger

COLOMBIA
BulletEM BulletEmerging Market News
  • Fiscal risks appear to be weighing on the Colombian peso today, with the currency underperforming, despite a further gain in WTI crude prices. USDCOP is up by 0.7% at 4425, leaving the pair broadly unchanged on the week. The move follows news that the constitutional committee of the lower house of Congress modified the de-centralisation bill yesterday, easing fiscal curbs.
  • Before today, the peso had been trading on a firmer footing this week, aided by the recent move higher in oil prices and the less dovish rhetoric by Banrep’s board members. Analysts remain cautious on the currency, with CIBC staying out of long COP positions as they await further data to assess the full impact of the de-centralisation bill on medium and long term fiscal metrics. In addition, they note that the government still needs to find ways to reduce its expenditures into year-end to comply with its fiscal targets.
  • Looking ahead, the de-centralisation bill now returns to the lower house for a debate in the first week of December, as noted earlier, before a final approval process to reconcile differences with the Senate.
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  • Fiscal risks appear to be weighing on the Colombian peso today, with the currency underperforming, despite a further gain in WTI crude prices. USDCOP is up by 0.7% at 4425, leaving the pair broadly unchanged on the week. The move follows news that the constitutional committee of the lower house of Congress modified the de-centralisation bill yesterday, easing fiscal curbs.
  • Before today, the peso had been trading on a firmer footing this week, aided by the recent move higher in oil prices and the less dovish rhetoric by Banrep’s board members. Analysts remain cautious on the currency, with CIBC staying out of long COP positions as they await further data to assess the full impact of the de-centralisation bill on medium and long term fiscal metrics. In addition, they note that the government still needs to find ways to reduce its expenditures into year-end to comply with its fiscal targets.
  • Looking ahead, the de-centralisation bill now returns to the lower house for a debate in the first week of December, as noted earlier, before a final approval process to reconcile differences with the Senate.