Colombian Peso's Short-Term Rally Will Turn To Long-Term Weakness

• The Colombian peso (COP) will continue to trade above its 2020 lows against the US dollar in 2021, boosted by an economic recovery, higher crude oil prices, and improving risk sentiment.
• That said, persistent fiscal deficits, the limited long-term upside for energy prices, and rising domestic inflation will cause the COP to modestly weaken over the coming years.
• Fitch Solutions forecasts the unit will average COP3,502.0/USD in 2021 and COP3,562.9/USD in 2022, from an estimated COP3,695.5/USD in 2020.

(Source: Fitch Solutions)