U.S. Dollar Opens the Week Lower in Colombia Amid Political Tensions
After this Monday holiday in Colombia, when the country celebrates the Day of the Virgin of Chiquinquira, and once trading resumes this Tuesday, the country will face a U.S. dollar exchange rate not seen in six years. Last Friday, for the first time since January 2020, the Market Representative Exchange Rate (TRM) stood at 3,248.87 pesos, and it will begin this Tuesday at that level.
That figure represents a drop of 56.36 pesos compared with the previous rate of 3,305.38 pesos, marking a trend in the foreign exchange market that completed a week in which the U.S. currency remained below the 3,300-peso threshold.
Some external reasons behind the dollar’s strength
Thus, so far in the 21st century, Colombia has recorded the third-largest appreciation of the peso and its strongest appreciation over the past ten years. Last Thursday, the dollar had reached its lowest market price so far in 2026 after falling to an intraday low of 3,490.00 pesos on the Colombian Stock Exchange, its lowest level since October 2019.
This behavior may have several explanations both inside and outside Colombia. Internationally, the war between the United States and Iran, with the impact it may have on oil prices, is a determining factor. Since crude oil is Colombia’s main export product, when its international price rises, more dollars enter the economy, creating an abundant supply of foreign currency and causing the exchange rate to fall (the peso strengthens).
In addition, investors abroad closely monitor U.S. economic data because it may influence the Federal Reserve’s decisions on interest rates. When interest rates in the United States remain high or are expected to rise, the dollar usually gains strength globally, according to the business newspaper Portafolio.
This happens because many investors prefer to move their money into dollar-denominated assets, which are considered safer. However, the newspaper notes that in the Colombian market the U.S. currency has been under downward pressure, supported by local factors and the recent performance of the peso.
The De la Espriella factor
When referring to local factors, analysts are pointing to the country’s political situation. The dollar began its downward trend at the same time that Abelardo de la Espriella began gaining momentum in Colombia’s presidential election, in which he ultimately defeated left-wing candidate Ivan Cepeda.
Throughout the campaign, De la Espriella’s candidacy had been generating strong confidence in the markets, which translated into a sharp decline in the price of the dollar (approaching lows not seen since 2020) and sparked debate over his fiscal policies and dollarization proposals. His definitive victory over Cepeda reinforced that trend.
Virtually from the moment electoral authorities certified De la Espriella’s victory, which outgoing President Gustavo Petro has refused to recognize, creating additional political tension in the country, Colombia’s financial markets reacted.
“With political uncertainty cleared, analysts are now shifting their attention from the so-called electoral risk premium to the implementation of the new administration, in an environment marked by an appreciation of nearly 9.5% in the Colombian peso so far this year,” an analysis by Valora Analitik explained two days after De la Espriella’s victory.
In fact, the day after the election, at the market’s opening on Monday, June 22, the currency showed a positive response to the election results. The dollar extended its decline, opening at 3,389.50 pesos, levels not seen since February 2020.
The outlet cited a report by Global66, according to which the market reaction confirmed that “the electoral factor dominates the external factor,” allowing the Colombian peso to appreciate while its Latin American peers depreciated against a stronger global dollar.
For this Tuesday’s trading session, there is uncertainty about what may happen to the dollar in Colombia, although the prevailing trend continues to point downward.
What remains to be seen, as the presidential transfer of power approaches, is whether the stance taken by President Petro and his defeated candidate Cepeda in refusing to recognize the election results and calling for civil disobedience will also influence the performance of the U.S. dollar.