Currency markets shift as Fed rate hikes impact Colombia and Venezuela

Currency markets in Colombia and Venezuela are experiencing significant volatility driven by external and domestic factors. In Colombia, the peso has seen a historic appreciation of nearly 23% in 2026, though recent movements show the US dollar rising above the 3,150 peso mark. This shift follows the US Federal Reserve's decision to raise interest rates by 25 basis points, increasing the attractiveness of dollar-denominated assets. Additionally, a decline in Brent crude prices has impacted the Colombian economy.

In Venezuela, the bolívar continues to struggle as a store of value, with consumers often converting it to dollars within 48 hours. Reports indicate that food accounts for 41% of household spending. Meanwhile, the official exchange rate via the Central Bank of Venezuela (BCV) has shown a steady upward trend, recently surpassing 848 bolívares. Despite currency fluctuations, Venezuela's country risk indicator has seen a substantial decrease of approximately 52% in 2026, dropping to around 6,037 basis points according to JPMorgan's EMBI.

Financial markets in Caracas also reported growth, with the Caracas Stock Exchange index rising 9.04% in a single week, driven by the financial and industrial sectors.