Colombian Hawks at Risk of Coming Too Late to Prop Up the Peso
- Currency offers less volatility-adjusted carry than peers
- Central bank has talked tightening, but not raised rates yet
Banco de la Republica, Colombia's central bank in Bogota
Photographer: Mariana Greif EtchebehereThis article is for subscribers only.
Colombia’s central bank has its work cut out for it if officials want to put a floor under one of the world’s worst-performing currencies this year.
The Colombian peso offers substantially less carry to investors than the currencies of major neighbors like Brazil, especially once volatility is taken into account. While the central bank has made more hawkish noises of late, suggesting that interest-rate hikes are on the way, that might prove too little, too late for some, leaving the currency at risk of continuing to underperform.