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|