Currency Forecast - COP: Modest Appreciation As Oil Prices Rise - OCT 2017

BMI View: The Colombian peso is likely to consolidate in a weaker trading range in the coming weeks following a break of key support in light of recent oil price weakness . That said, we remain relatively constructive on the unit over the next several months in anticipation of gradually recovering oil price s and still-significant real yields .

Short-Term Outlook (Three-to-Six Months)

The Colombian peso (COP) is likely to trade within a new, weaker range in the coming weeks. Weakness in the price of Brent crude oil - Colombia's main export - over the last month has largely been the catalyst of the currency's depreciation. After failing to break long-term resistance in H117, the unit breached support near COP3,000/USD in late June, suggesting that additional weakness lies ahead. This chimes with our expectations that oil price gains will be relatively muted in the next several weeks.

Break Of Support May Signal Prolonged Short-Term Weakness
Exchange Rate, COP/USD (Daily)
Source: Bloomberg, BMI

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