Colombia’s Peso Is Up 19% This Year as a New President Meets a Split Central Bank

FX: Colombia

Colombia’s peso is one of the world’s best-performing currencies in 2026, supercharged by a central bank that keeps hiking while its neighbors cut — and the rally now faces its first test under a brand-new president.

A Rally Measured in Hundreds of Pesos

The scale of the move is easiest to see in the official market rate, the TRM published daily from Superintendencia Financiera data. On August 16, 2026, the dollar was worth 3,128.65 pesos — down 628 pesos, or 16.7%, from the start of the year, and down 22.2% from a year earlier.

July alone was extraordinary. The TRM began the month at 3,440.83 and ended it at 3,132.42, the lowest dollar level in years at the time, a slide of 308 pesos — about 9% — in four weeks. For importers, expats sending dollars, and anyone holding peso assets, the shift has been one of the defining market stories of Colombia’s year.

Analysts at Capital Economics put the year-to-date gain near 19% in early August, ranking the peso ahead of regional peers and noting that the strength itself has become a factor in monetary policy.

A Central Bank Hiking Into Strength

While Brazil and Mexico debate how fast to ease, Banco de la República has spent 2026 tightening. The policy rate, 10.25% in February, went to 11.25% effective April 1 and 12% effective July 1. At the meeting whose statement was published July 31, the board voted to hold at 12% — but by the narrowest of margins.

The July 31 statement showed a 4-3 split, with three of seven directors pushing for a further half-point increase. Brazil’s BTG Pactual, which had expected a hike, described even the hold as carrying a “strong hawkish bias” — driven, in large part, by the very strength of the peso and what it signals about capital inflows.

The reason for the vigilance is inflation that refuses to converge. The bank’s own projections earlier this year put 2026 inflation near 6.9%, double the 3% target, with indexation of services and administered prices keeping pressure alive. A September hike remains on the table.

What Is Driving the Money In

Three forces converge. First, the rate differential: a 12% policy rate in a world of easing central banks pulls in carry capital. Second, politics: investors have welcomed the election of Abelardo de la Espriella, sworn in on August 7, 2026, betting his right-leaning government will tighten fiscal policy and protect the central bank’s independence.

Third, the dollar itself: a softer U.S. currency through mid-2026 has lifted most emerging-market exchange rates, and the peso — liquid, high-yielding and now politically fashionable — has been near the front of that queue.

The flip side is competitiveness. Exporters of coffee, flowers and manufactured goods are selling into a market where every dollar earned converts into far fewer pesos than a year ago, and the powerful peso complicates the new government’s promise to revive industry.

Three Risks to the Peso’s Run

The first is fiscal. De la Espriella inherits unbalanced public finances; if his government fails to credibly narrow the deficit, the risk premium that has been compressing could rebuild quickly. The second is the central bank itself: with the board split 4-3, one resignation or appointment could flip the policy bias.

The third is external. A U.S. dollar rebound, a slide in oil — still a top Colombian export — or a global retreat from emerging-market carry trades would hit a crowded position. The peso’s 2026 rally has been built on inflows that can reverse in weeks, as Colombians who watched past selloffs know well.

What to Watch Into Year-End

The September BanRep meeting is the next fixed point: the minutes of the last decision make clear a hike was seriously debated. After that, the new government’s first budget signals will show whether the fiscal optimism priced into the peso is justified.

The bottom line: a 22% twelve-month rally has made the peso a darling — and a hostage. It now depends on a split central bank staying hawkish and a brand-new president proving the market’s bet right.

Frequently Asked Questions

What is the dollar worth in Colombian pesos right now?

The official TRM was 3,128.65 pesos per dollar on August 16, 2026. The dollar is down about 16.7% year-to-date and roughly 22% over twelve months, based on Superintendencia Financiera data — one of the strongest peso performances in years.

Why is the Colombian peso so strong in 2026?

A 12% central bank rate attracting carry capital, investor optimism around the new de la Espriella government, and a softer U.S. dollar globally. The peso gained almost 9% against the dollar in July 2026 alone.

Will Banco de la República raise rates again?

Possibly. The board held at 12% in its decision published July 31, 2026, but split 4-3, with three members wanting a hike. With inflation projected near 6.9% for the year, a September increase is openly in play.

Sources: Banco de la República; Superintendencia Financiera TRM data; Noticias Caracol; Colombia.com.

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