Colombian markets slid as tensions escalated between President Donald Trump and Colombian President Gustavo Petro following the US-led ouster of Venezuela’s Nicolás Maduro. The peso dropped nearly 2% and Colombian bonds fell amid sharp rhetoric from Trump, who threatened Petro after criticizing Colombia’s stance against the operation, reports Maria Elena Vizcaino of Bloomberg. Petro rejected the threats as illegitimate, while investors grew increasingly uneasy about inflation risks, policy uncertainty, and the prospect of another left-leaning government after upcoming elections. Vizcaino writes:
Colombian assets fell on Monday as tension between US President Donald Trump and his counterpart in the South American nation grew in the wake of Nicolas Maduro’s ouster in Venezuela.
The peso slipped almost 2% at the open, while Colombian dollar bonds fell close to 1 cent across the curve, leading emerging-market losses.
Over the weekend, Trump called Petro “a sick man who likes making cocaine” and selling it to the US. “He’s not going to be doing it very long, let me tell you,” Trump told reporters Sunday evening aboard Air Force One. […]
Colombian assets have already been under pressure since Petro announced a 23% minimum wage hike last month, stoking fears of inflation and budget strains for the nation. Labor Minister Antonio Sanguino said Friday the administration is mulling measures, such as price controls. […]
Petro cannot run for re-election, but a survey published in late December showed his ally Senator Iván Cepeda would get 30.7% of the vote if the election happened as the poll was conducted.
“I don’t think that any kind of military action in Colombia is likely, but tensions can only rise from here,” said Alvaro Vivanco, head of strategy at TJM FX. “If they play it well, the US explicitly saying they are controlling a neighbor could end up helping the now-leading leftist candidate Cepeda.
Read more here.
