Market Analysis by Quasar Elizundia, Expert Research Strategist at Pepperstone [April 23, 2025]
“The Colombian peso fell against the US dollar on Wednesday, as both domestic and external factors weighed on the currency. On the local front, crude prices continued to decline amid signs that OPEC+ may further ramp up production. Lower oil prices directly undermine Colombia’s terms of trade and fiscal outlook, especially as the country reported a wider trade deficit of USD 1.24 billion in February. Imports rose 10.5% year-on-year, driven by higher purchases of fuel, machinery, and food. While this may reflect resilient domestic demand, it also increases pressure on external accounts.
Adding to the strain, the IMF revised Colombia’s 2025 growth forecast down from 3.0% to 2.4%, citing slower global momentum and persistent inflation. The downgrade, coupled with a deteriorating trade balance, is likely to sustain selling pressure on the peso in the near term.
Externally, a rebound in the dollar weighed further on the currency. President Trump clarified that he has no intention of removing Fed Chair Jerome Powell, easing concerns over central bank independence. Meanwhile, a more conciliatory tone toward China helped revive risk sentiment, lifting demand for US assets and reducing appetite for emerging market currencies.
Looking ahead, all eyes turn to next week’s interest rate decision. After holding rates steady in the previous meeting, any move to cut could reduce the peso’s appeal and add to depreciation pressures.”
