Colombia Peso Gains 2.3% on De La Espriella Presidential Win
2h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
colombia-pesoabelardo-de-la-espriella
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Colombia’s peso strengthened 2.3% against the US dollar following the presidential election of right-wing candidate Abelardo De La Espriella on June 21, 2026. The currency closed at 3,812 COP/USD, its strongest level in seven weeks. The rally reflects investor optimism toward De La Espriella’s proposed pro-business reforms and fiscal discipline. Investing.com reported the election results on June 22, confirming a decisive shift in the nation's political direction.
De La Espriella’s victory ends eight years of leftist governance under the Gustavo Petro administration, which pursued expansive social programs and environmental restrictions on mining. The last major political shift of this magnitude occurred in 2018 when Petro was first elected, triggering a 5.1% sell-off in the COP over the subsequent week. Colombia’s 10-year government bond yield currently trades at 8.7%, significantly higher than the EM average of 6.9%, reflecting a persistent country risk premium.
The election was triggered by widespread discontent over sluggish economic growth, which averaged 1.4% annually under Petro. High inflation, peaking at 13.5% in 2023, eroded purchasing power despite aggressive rate hikes by Banco de la República. De La Espriella campaigned on a platform of tax cuts for corporations, loosening restrictions on the oil and gas sector, and reining in public spending to address a fiscal deficit projected at 5.1% of GDP.
Colombia’s equity market reacted positively to the election outcome. The MSCI Colombia Index surged 4.8% in Monday’s pre-market trading, outperforming the broader MSCI Emerging Markets Index, which was flat. The Colombian 10-year bond yield tightened by 35 basis points to 8.35% as investors priced in reduced sovereign risk. Ecopetrol SA, the state-controlled oil company, saw its ADRs jump 7.2% on the NYSE.
A comparison of key economic indicators highlights the challenges facing the new administration. Unemployment stands at 10.5%, nearly double the regional average. Foreign direct investment fell to $12.1 billion in 2025, down 18% from the previous year. The nation’s debt-to-GDP ratio has expanded to 64%, up from 52% in 2022, constraining fiscal policy options.
Specific sectors are positioned for significant gains under the new policy direction. The energy sector, particularly drillers and explorers like Canacol Energy Ltd., stands to benefit from eased environmental licensing. The iShares MSCI Colombia ETF (ICOL) recorded $48 million in net inflows following the election result, its largest single-day inflow in 12 months. Banking stocks such as Bancolombia SA should see improved margins from potential interest rate cuts spurred by greater fiscal stability.
A primary risk to this optimistic outlook is the strength of De La Espriella’s coalition in Congress. His party holds only 40% of seats, which may force compromises that dilute the pro-market agenda. Institutional investors are increasing long positions on the COP via futures contracts, with open interest rising 22% since polls closed. Short-term speculative flow is targeting the 3,800 COP/USD level as a key test of momentum.
The first major test for the new administration will be the presentation of its fiscal reform package to Congress, expected by August 15, 2026. Markets will scrutinize the proposal for specific corporate tax rate reductions and spending cut targets. Banco de la República’s next rate decision on July 31 will be critical for currency stability, with analysts forecasting a 50 basis point cut if political transition proceeds smoothly.
Key levels for the peso include immediate resistance at 3,780 COP/USD, a level not traded since February. A break below that could target 3,750. Conversely, failure to form a stable coalition could see the currency weaken back toward the 3,900 level. Bond yields will be watched for a sustained move below 8.25%, signaling renewed investor confidence in Colombian debt.
The election is broadly positive for Colombian equities, particularly those tied to domestic economic activity. The MSCI Colombia Index is heavily weighted toward financials and energy, which are direct beneficiaries of proposed deregulation and tax cuts. International investors previously underweight Colombian assets due to political risk may begin reallocating capital, providing a sustained tailwind for the local stock exchange.
Rating agencies will monitor the government’s ability to pass a credible fiscal consolidation plan. Fitch Ratings currently has Colombia at BB+ with a negative outlook. A successful reform package that stabilizes the debt trajectory could lead to an outlook revision to stable, potentially by the fourth quarter of 2026. A downgrade remains possible if political gridlock prevents meaningful fiscal reform.
The peso’s rally reflects a sharp repricing of political risk, and much of the immediate gains may already be priced in. Further appreciation depends on the concrete implementation of campaign promises. Long-term investors might consider the currency fundamentally undervalued, but short-term volatility is expected during the political transition. The currency remains 15% below its 5-year average valuation.
Markets priced in a regime shift toward market-friendly policies, lifting assets most exposed to domestic reform.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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