COP: On Target, With Amplified Risks

Appreciation of the Colombian peso has slowed in recent months, and accordingly we maintain our neutral outlook for the time being. With Colombia's central bank now pausing its benchmark interest rate hiking cycle, and rising uncertainty over the eurozone debt crisis and US recovery, we believe there is potential for weakness against the dollar in the short-term as investors eschew riskier emerging market currencies. We highlight COP1,760/US$ as a robust resistance level that the peso is unlikely to breach in the short-term, and place support at the COP1,805/US$ level.

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