Speculation over government dollar purchases triggers the peso’s sharpest drop in two months, weighing on local assets.
The Colombian peso fell 2.5% against the dollar, its steepest decline since mid-July, on unconfirmed reports that the government is buying USD to bolster reserves or meet fiscal needs. The move erased gains from last week’s central bank rate cut and rattled bond markets, pushing yields higher by 15 basis points across the curve.
Prior to the drop, the peso had stabilized near 4,100 per dollar, supported by rising oil prices and expectations of further monetary easing. Analysts had forecast a quiet session, with most emerging-market currencies trading in narrow ranges ahead of U.S. inflation data later this week.
Local equities underperformed regional peers, with the COLCAP index slipping 0.8% as foreign investors reduced exposure to Colombian assets. The central bank has not commented on the speculation, leaving traders to assess potential intervention risks.