This week, risk aversion has fluctuated, responding closely to China’s decisions. Regarding the possibility of easing the zero-COVID restrictions, some cities have softened their measures, reflecting what could be a gradual reopening of the economy. If this trend continues, with less restrictive policies driven by an expected contractive Chinese Consumer Price Index, there could be a boost in risk appetite, contributing to the recovery of emerging markets. The possible alleviation of economic blockages in China could enhance oil prices, increasing future capital inflows to Colombia and strengthening the COP. This week, we expect the local market to react to Saturday’s Colombian uphill inflation, which, being above analysts consensus, could reinforce expectations of a hawkish Banco de la República (BanRep), making rates more attractive to foreign investors. Despite strong local drivers, we expect the USD/COP to be mostly guided by the international context during the week. Therefore, we expect a trading range for the week for the pair between COP$4,750 (lower limit COP$4,700) and COP$4,880 (upper limit COP$4,920).
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