The resilience of the Colombian peso (COP) against the dollar has surprised markets in 2025, exceeding expectations despite a challenging global and local backdrop. The key news: JPMorgan has shifted its position and closed its “underweight” recommendation on the COP, acknowledging the strong performance of the currency.
What’s Driving the Colombian Peso in 2025?
Notable Gain: The peso has risen over 6.5% so far this year, making it the second-best performing currency in Latin America, just behind the Brazilian real (7.4%), and globally bested only by the Russian ruble.
Adverse Factors Overcome:
Trade tensions with the U.S.
Critical comments about the fiscal rule by the CARF.
Lower international oil prices.
Despite these headwinds, the COP has shown strength, driven by the closing of short positions by investors and the view that pessimism about Colombia was already overdone.
Key Decisions by Colombia’s Central Bank
In its latest meeting, the central bank surprised by holding interest rates steady at 9.5%, citing higher inflationary pressures after the minimum wage increase.
This moderate stance has signaled to markets that the monetary authority is committed to controlling inflation, which is supporting the currency.
S&P maintained Colombia’s credit rating, removing an extra layer of downside pressure.
Market Outlook and Expectations
JPMorgan sees little significant risk in the short term and anticipates a favorable period for the currency, following a clear shift in investor sentiment.
Bloomberg Intelligence highlights that markets have been more tolerant of Colombia’s fiscal deficit (56% debt-to-GDP ratio) compared to Brazil.
Analysts expect the exchange rate to trade between COP$4,314 and COP$4,361 in the coming months, and COP$4,389 by December 2025. The current price is COP$4,180.06.
The COLCAP stock index in dollar terms has risen 17% in 2025, reflecting renewed foreign investor appetite amid signals of greater political and regulatory stability.
What Could Happen Next for the Dollar in Colombia?
A cheaper dollar versus the peso is possible if investment inflows continue, confidence in monetary policy holds, and fiscal risks remain contained.
The appointment of new central bank board members and global conditions will keep influencing the outlook, but the base scenario remains one of renewed strength for the COP, at least in the short term.
Conclusion
The Colombian peso is experiencing one of its best moments against the dollar, thanks to a mix of external factors, disciplined monetary policy, and lower perceived country risk. JPMorgan and other market players are becoming more optimistic, opening the door to a cheaper dollar and a favorable 2025 for the local currency.
