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Investing.com - Colombia’s financial markets could see improved sentiment with the anticipated return of a right-wing government in the second half of 2026, according to a new report from BCA Research.
The research firm cautions investors against dismissing current President Gustavo Petro’s influence on the economy. Petro’s populist and heterodox policies are expected to contribute to inflation remaining stubbornly above target levels while simultaneously weakening the Colombian peso.
BCA Research highlights that Colombia’s deteriorating balance of payments situation will likely cause the peso to underperform compared to other emerging market currencies. The research indicates the Colombian peso will move sideways against an already depreciating U.S. dollar.
The report suggests that Colombian financial market performance relative to emerging market peers will depend on whether investors focus on the promise of future political change or the current economic challenges facing the country.
Colombia’s long-term domestic bonds could also be affected by this investor sentiment dynamic, with their performance tied to whether markets trade on the anticipated political shift or the immediate economic difficulties under the current administration.
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