9 Jun 2026

A breather that depends too much on oil

The Colombian peso enters this week with less immediate noise, but not with fully improved fundamentals. Over the last few days, stronger exports, a labor market that is still holding up, and the full repayment of the IMF debt taken during the pandemic all came into view. The problem is elsewhere: much of that relief is once again resting on oil, while May inflation reminded markets that BanRep will remain uncomfortable and that the dollar still has reasons to rebound.

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Analysis

Four recent data points that explain why the peso's relief still looks fragile

Between June 5 and June 8, Colombia received mixed signals. There are hard-currency inflows and some financial oxygen, yes. But high prices, expectations of restrictive rates for longer, and an excessive dependence on oil income remain in place whenever the global backdrop turns helpful.

Exports improved, but narrowly
External flow
More dollars came in DANE reported that April exports reached US$4.6004 billion FOB, up 11.7% year over year. That helps the FX market because it improves hard-currency supply just when the country needs to show it can generate external cash.
The improvement again leaned on extractives The same bulletin said much of the jump came from a 46.2% increase in fuels and extractive industries. That composition matters: relief driven by diversified productivity is very different from relief tied to a favorable oil and commodities cycle.
Jobs are holding, inflation is not fully easing
Domestic demand
The labor market did not crack According to DANE, national unemployment was 8.8% in April, while the employment rate reached 59.1%. That prevents a sharp deterioration in consumption and gives the government a data point to argue that the economy is still alive.
But prices still set the tone May CPI rose 0.47% on the month and 5.84% from a year earlier. Pressure in housing, utilities, and transport shows that the inflation problem has not disappeared. If the economy is resilient and prices remain above target, BanRep does not have much room to turn complacent.
Financial relief does not rewrite the full story
Sovereign risk
Paying off the IMF mattered The finance ministry said on June 1 that Colombia repaid roughly US$5.4 billion to the International Monetary Fund. That reduces a visible obligation and improves the short-term reading on external liquidity.
It does not equal automatic discipline Settling one debt helps, but it does not by itself resolve the debate over deficits, spending, and fiscal credibility. Markets distinguish between paying a specific commitment and truly correcting the path of public finances.
BanRep still has no comfortable room
Exchange rate
The central bank did not intervene in May BanRep reported on June 5 that it carried out no foreign-currency purchases or sales in May. That removes one immediate source of official noise around the FX market, but it does not change the deeper debate.
The expectation is still caution In its April Monetary Policy Report, the central bank projected inflation of 6.4% by December 2026. Translated into USD/COP: even if exports bring in more dollars and the government gains some financial breathing room, the peso will remain fragile as long as the central bank needs a tough stance to defend credibility.

The most interesting part of these days is that the country did show signals which, under different circumstances, would be enough to support a far more optimistic narrative. Higher exports, resilient employment, and a meaningful IMF repayment are not minor details. Taken separately, they point to a currency with more backing.

But Colombia's FX market has already learned to distrust improvements that are too concentrated. If the external flow improves because oil is pulling again, while inflation stays uncomfortable and fiscal policy still fails to convince, relief for the peso looks tactical rather than structural. It helps contain pressure. It does not provide insulation.

The thesis for the dollar in Colombia, then, is not that the country is on the verge of a break. It is that the current calm rests on a narrow support base. As long as oil carries too much weight in the positive story and BanRep keeps seeing inflation as incompatible with a rapid easing cycle, any political, fiscal, or external shock can bring hedging demand back and push the market toward the dollar again.