(Bloomberg) -- The Colombian peso led losses among emerging-market currencies Wednesday, dragged lower by mounting fiscal risks and swings in the price for oil, the nation’s most important export.
The peso weakened as much as 2% against the dollar, dipping to its lowest level since May 2023. The currency has lost more than 14% this year and become increasingly sensitive to risk-off sentiment, while the dollar has strengthened since Donald Trump won the US election, said Andres Pardo, head of LatAm macro strategy at XP Investments.
It has also been hit recently by a string of headlines about government finances, which has raised concerns about the nation’s fiscal health. Telefonica announced it had won an arbitration award against Colombia for $380 million, which added to those jitters.
Brent crude, meanwhile, has fallen 3.6% over the past week, though it trimmed some of those losses Wednesday. Oil is one of Colombia’s main foreign revenue earners.
The peso clawed back some of its losses by 12:30 p.m. in New York to trade at 4,502 per dollar. That’s weaker than a key psychological level, said analysts at BBVA.
“The COP should seek a rebound to catch up with other pairs like the MXN, which remain flat or with losses of 0.50%” since Trump won office, they wrote in a note.
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