The political risk of Gustavo Petro taking power caused the peso to collapse in 2022 when it rose to over 5,000 pesos for every dollar. The peso strengthened only after the market saw that the reform agenda was blocked and that Petro’s abysmal approval ratings made it nearly impossible to revive.
Gustavo Petro's administration remains unperturbed by the fluctuating dollar in Colombia, maintaining a range between $3,850 and $4,100. Finance Minister Ricardo Bonilla highlights in an interview a positive market response to the current exchange rate, signaling stability in both local and global contexts.
In the interview, Minister Bonilla emphasized that the current dollar figures align with those of 2019, indicating a return to the stability witnessed before the onset of the COVID-19 lockdowns. Acknowledging the pandemic-induced recession in 2020, Minister Bonilla points out that Colombia experienced significant economic growth in its aftermath. This growth trajectory has dispelled concerns about the dollar reaching levels above $5,000, according to the Petro government.
Minister Bonilla forecasted continued stability, projecting the dollar to hover around $4,000 in 2024. He suggests a range between $3,900 and $4,100, providing favorable conditions for both exporters and importers. He asserted that maintaining the dollar within this range will offer favorable conditions for competitiveness. This stability ensures exporters can thrive while providing clear rules of the game for importers, fostering a balanced economic environment.
When asked about potential interventions, Minister Bonilla clarified that the Petro government has not considered any direct intervention mechanism. Instead, the Central Bank plans to increase international reserves by $1.5 billion over 18 months. Although this strategy involves periodic auctions, its overall impact on the Colombian dollar is expected to be moderate.
The Petro government's optimistic outlook for the Colombian Peso and the dollar in 2024 potentially positions the country as an attractive prospect for institutional real estate investors.