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COLOMBIA: Peso Down 0.75% on Session, Holds in Relatively Well

COLOMBIA
BulletEM BulletEmerging Market News
  • Considering the domestic political risks over the weekend, and some of the broader moves in emerging market FX to start the week, the Colombian peso holds in well, just 1% lower on the session, yet maintaining the bulk of gains made across last week.
  • USDCOP trades around 4225, prices last seen around mid-October last year. This latest optimism for the peso might provide the BanRep committee enough comfort to ease policy further, having surprised hawkishly in December and some even calling for an unchanged decision on Friday.
  • Indeed, SocGen expect BanRep to follow the new pace of easing (25bp cut per meeting) in the coming quarters. They believe that with uncertainties over the Fed’s rates outlook persisting, BanRep should follow this new pace, although the risk is probably tilted towards downside that the central bank might consider going back to 50bp rate cuts given the renewed growth pressure. SocGen now expect a year-end rate at 7.5%.
  • The Bloomberg survey for Friday’s decision currently sees three analysts looking for a hold, compared to the remaining 22 forecasting a 25bp cut.
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  • Considering the domestic political risks over the weekend, and some of the broader moves in emerging market FX to start the week, the Colombian peso holds in well, just 1% lower on the session, yet maintaining the bulk of gains made across last week.
  • USDCOP trades around 4225, prices last seen around mid-October last year. This latest optimism for the peso might provide the BanRep committee enough comfort to ease policy further, having surprised hawkishly in December and some even calling for an unchanged decision on Friday.
  • Indeed, SocGen expect BanRep to follow the new pace of easing (25bp cut per meeting) in the coming quarters. They believe that with uncertainties over the Fed’s rates outlook persisting, BanRep should follow this new pace, although the risk is probably tilted towards downside that the central bank might consider going back to 50bp rate cuts given the renewed growth pressure. SocGen now expect a year-end rate at 7.5%.
  • The Bloomberg survey for Friday’s decision currently sees three analysts looking for a hold, compared to the remaining 22 forecasting a 25bp cut.