- USDCOP rose 0.66% on Wednesday, extending the rally from the October highs to 6.3%. The continued slide for the peso has recently been assisted by the Senate voting to approve a constitutional reform aimed at increasing government transfers to regional authorities. The bote ignores several warnings that the bill may be fiscally unsustainable.
- While analysts are divided between whether BanRep will opt to continue with its 50bp easing pace in October or deliver a larger 75bp cut of the overnight lending rate, the recent swing for the peso should bolster the likelihood that the central bank opts for the more cautious move.
- Recent central bank rhetoric also suggests that the cautious stance may prevail amid mounting fiscal concerns, and this is corroborated by the median surveyed estimate forecasting a 50bp move.
- However, last month’s close vote split, and latest BanRep survey data suggest that the decision is by no means set in stone. The full MNI preview with analyst views is here: https://mni.marketnews.com/48p7Hrq
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