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If the dollar collapses to 2,800 pesos in 2026, the carry trade — a speculative strategy that has supported the Colombian peso this year — could become a source of financial instability, with cascading effects on exports, remittances, and monetary policy.
The colombian carry trade is based on the anomalies that the dollar would cause to exporting companies in Colombia among others. This thesis is not about the opportunities for travel and shopping, which I will address in a different article.
The other day I was talking to a couple of neighbors that are in the business of selling used cars, they had made a comfortable livelyhood for a couple decades, now they're worried, their sales are down due to crashing prices of new vehicles being imported into the country. Nonetheless, I told them that when dollar rises against the peso, many people who bought those vehicles through credit will be crying because many of those owners signed those letters of credit...on dollars, not pesos. New car owners will see their car-payments increase 10-20% in just matter of months.
What is the carry trade and why does it matter in Colombia?
The carry trade is an investment strategy that involves borrowing in a currency with low interest rates (like the US dollar) to invest in assets denominated in another currency with higher yields (like the Colombian peso). Its profitability depends on two factors: the interest rate differential and the exchange rate movement.
In 2026, Colombia has been one of the most attractive emerging markets for this strategy thanks to its high local interest rates combined with a weak global dollar. This has driven an appreciation of the peso of around 14% in the last year, making it one of the strongest currencies in the region.
The risk scenario: dollar at $2,800
A fall in the dollar to 2,800 pesos would represent a significant additional depreciation compared to current levels (which fluctuate between 3,600 and 3,800 pesos). Although extreme, this scenario would expose several vulnerabilities:
1. Abrupt unwinding of speculative positions
The carry trade is highly sensitive to episodes of higher global risk aversion. When investors perceive signs of fiscal unsustainability, political uncertainty, or a deterioration in external conditions, they tend to unwind positions simultaneously, which amplifies currency swings.
The critical feature of these strategies is their asymmetry: gains accumulate gradually, but losses, when they materialize, are abrupt and larger in magnitude. As financial literature puts it: "exchange rates go up the stairs and down the elevator."
2. Impact on exports and productive sectors
Excessive peso appreciation (a cheaper dollar) reduces the competitiveness of Colombian exports. Sectors such as agriculture, mining, and manufacturing would see their peso revenues decline, which could affect the trade balance and employment in regions dependent on these sectors.
3. Hit to remittances and household consumption
Remittances represent about 3% of Colombia's GDP and 3.6% of household spending. In 2025, the country received USD 13,098 million in remittances, an 11% increase from 2024.
If the dollar falls to 2,800 pesos, recipient families would get fewer pesos for every dollar sent, reducing their purchasing power to cover daily expenses like food, rent, and utilities. This effect is concentrated in departments like Antioquia, Valle del Cauca, and Cundinamarca, which receive more than half of the inflows.
4. Pressure on monetary policy
An extremely cheap dollar could complicate management at the Banco de la República. On one hand, it would reduce imported inflationary pressures. On the other, excessive appreciation could force more aggressive rate cuts to curb speculative capital inflows, with risks of overheating in other assets.
Warning signs already on the radar
Analysts like Corficolombiana have warned that the current strength of the peso hides vulnerabilities. The firm projects that without credible signals of commitment to fiscal sustainability, the sovereign risk premium could rise, deflating foreign investor enthusiasm.
In addition, the electoral calendar and country risk perception represent sources of uncertainty. A shock of political distrust could trigger a depreciation of more than 20%, pushing the exchange rate above 4,500 pesos, as happened after the 2022 crisis.
Ideas for investors and policymakers
- For investors: Prepare for a possible reversal of the trend. Some analysts suggest that the peso's appreciation streak could be running out in the coming weeks.
- For the government: Maintain credible signals of fiscal commitment to prevent "hot money" from pulling out abruptly.
- For families: Strengthen precautionary savings and maintain financial planning, given that exchange rate volatility will remain a determining factor.
In short, a dollar at 2,800 pesos in 2026 would not just be an exchange rate figure: it would be the symptom of a massive unwinding of the carry trade, with real consequences for the productive economy, families, and Colombia's macroeconomic stability.
#USDTfree #Colombia

Gold will eventually break out to the upside but it won't be that easy. Choppiness due to the war in the Middle East, high inflation due to oil prices among others will hang around for a while.
Financial markets rarely move in a straight line. Yet, despite persistent concerns over inflation, geopolitics, and slowing economic growth, there is a compelling bullish case for risk assets over the next two to three months. While uncertainty remains elevated, several macroeconomic and market factors are aligning in a way that could support a continuation of the current rally.
1. Central Banks Are Becoming More Accommodative
The most important driver of financial markets is monetary policy. Across major economies, inflation has moderated significantly from its post-pandemic peaks. This has allowed central banks to shift from aggressive tightening toward a more neutral—or even accommodative—stance.
Lower interest rates reduce borrowing costs for businesses and households while increasing the present value of future corporate earnings. Historically, periods surrounding the first rate cuts have often been constructive for equities, provided the economy avoids a severe recession.
2. Corporate Earnings Are Holding Up
Despite repeated predictions of an earnings recession, many companies continue to report resilient profits. Technology firms, industrial companies, and consumer businesses have demonstrated an ability to protect margins through productivity gains and disciplined cost management.
If earnings continue to exceed expectations, investors may be willing to assign higher valuations to stocks.
3. Artificial Intelligence Continues to Drive Investment
The AI revolution remains in its early stages. Capital expenditures by cloud providers, semiconductor manufacturers, and software companies continue to expand.
Rather than being a short-term trend, AI is increasingly viewed as a multi-year productivity cycle comparable to the internet revolution of the late 1990s or the smartphone boom of the 2010s.
This secular theme continues attracting institutional capital.
4. Liquidity Conditions Are Improving
Markets perform best when liquidity is abundant.
Government spending remains elevated in many countries, household balance sheets remain healthier than expected, and money market funds still hold substantial cash that could gradually rotate into equities if investor confidence improves.
Improving liquidity often supports higher asset prices.
5. Investor Positioning Is Still Cautious
Ironically, skepticism itself can become bullish.
Numerous surveys indicate many institutional investors remain underweight equities after years of uncertainty. If economic data remain stable, these investors may be forced to increase exposure to avoid underperforming benchmarks.
This phenomenon, often called a "wall of worry," has historically fueled sustained market advances.
6. Seasonal Tailwinds
Certain months have historically produced stronger market returns than others. While seasonality never guarantees performance, positive seasonal patterns combined with improving fundamentals can reinforce bullish momentum.
Markets often climb gradually as portfolio managers rebalance and investors position for year-end performance.
Risks That Could Challenge the Bullish Thesis
A balanced outlook also requires acknowledging downside risks:
- A resurgence in inflation could delay interest-rate cuts.
- Escalating geopolitical conflicts could disrupt energy markets.
- Corporate earnings could disappoint.
- Unexpected financial stress could tighten credit conditions.
- Valuations in parts of the market are already elevated, leaving less room for error.
Conclusion
The short-term outlook appears cautiously optimistic. Cooling inflation, resilient corporate earnings, improving liquidity, continued investment in artificial intelligence, and relatively cautious investor positioning provide several reasons to expect constructive market performance over the next couple of months.
However, investors should distinguish between a cyclical rally and a permanently bullish environment. Markets remain data-dependent, and disciplined portfolio management—including diversification and risk management—remains essential.
In investing, the strongest bull markets are often born not when optimism is universal, but when improving fundamentals gradually overcome widespread skepticism. So I expect Gold to correct to 3,500 before it goes up to 5,000 in the next 60 days. #PAXGUSDT #GOLD

New incoming President Abelardo de la Espriella, rate hikes from Banco de la República, high oil prices and subsequent sale moves of colombian bonds from Agencia de Crédito pushed the peso up against the dollar.
Among other factors are the following:
Appreciation of the Colombian Peso: Key Factors
Global Context
The depreciation of the dollar in international markets explains more than half of the peso's appreciation. US tariff and fiscal policies, along with geopolitical tensions, have eroded confidence in the Treasury and the Federal Reserve, reducing the dollar's appeal as a reserve currency.
Domestic Factors
The high interest rate set by Banco de la República has maintained an attractive differential for carry trade strategies, drawing capital flows into Colombian bonds. Remittances from Colombians abroad reached record levels, boosting the supply of foreign currency.
In addition, strong export prices for products like coffee and oil improved the trade balance.
Outlook
Despite fiscal risks and a sovereign credit rating downgrade, the peso has shown resilience. However, analysts warn that this appreciation does not reflect a structural improvement in economic fundamentals, but rather temporary flows that could reverse with changes in the global dollar cycle.
$USDC #USDT