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USDCOP Holds Close To Year-To Date Lows, BanRep Decision Due Friday

COLOMBIA
  • USDCOP has moved marginally higher on the open Wednesday, but remains close to the YTD lows reached yesterday, as the peso continues to benefit from elevated carry and oil prices close to their highest since last October. The move lower in oil prices today and firmer dollar ahead of the Fed meeting are likely weighing on the peso at the margin. However, COP resilience is notable in comparison to its Andean counterpart.
  • Later this week, BanRep is expected to step up the pace of easing, with the majority of analysts looking for a 50bp cut to 12.25%. But with the real ex-ante policy rate currently above 8%, far higher than BanRep’s 2.4% neutral estimate, real yields will remain supportive of the peso, unless the central bank surprises with an even larger move.

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