Colombia's central bank holds rates, buys $400 million reserves amid peso rally

The Banco de la República kept its benchmark interest rate unchanged at 12% as uncertainty persists over future monetary policy decisions. The bank also launched a monthly auction to purchase US$400 million in foreign reserves, a preventive measure aimed at strengthening its balance sheet against potential global financial shocks. The announcement triggered an immediate market reaction, with the Colombian peso’s reference exchange rate (TRM) rising by about 81 pesos during the trading day.

Deutsche Bank revised its year‑end forecast for the peso, lowering the projected USD/COP rate to 3,600 from a previous 3,700‑3,800 range. The bank warned that the market had become overly optimistic about Colombia’s fiscal outlook and highlighted concerns over the basic balance, commercial performance, and valuation levels. It cautioned that the recent appreciation of the peso was not fully supported by underlying economic fundamentals.