Everything felt predictable for a while. You’d check the screen, see the Colombian peso to US dollar rate hovering in a familiar range, and go about your day. But lately? Things have gotten local, messy, and a bit unpredictable.
If you're holding pesos or planning a trip to Medellín, you’ve probably noticed the COP hasn't been the easiest horse to bet on. As of mid-January 2026, the rate is sitting around 3,670 to 3,700 pesos per dollar. That sounds like a win for the peso compared to the 4,000+ levels we saw throughout much of 2024 and 2025, but it’s not exactly a smooth ride down.
Markets are jittery. Honestly, they have every reason to be.
Between the central bank playing hardball with interest rates and the government declaring "economic emergencies" over budget gaps, the peso is caught in a tug-of-war.
What’s Actually Driving the Rate Right Now?
Most people think exchange rates are just about oil prices. While oil still matters—Colombia is still a major exporter, after all—the real drama is happening inside the halls of the Banco de la República in Bogotá.
The central bank has been incredibly stubborn. While the US Federal Reserve has been trimming rates to keep the American economy humming, Colombia’s central bank kept its benchmark rate at a staggering 9.25% well into late 2025 and early 2026.
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Why? Because inflation in Colombia is like that one guest who won't leave the party.
Even as we entered 2026, annual inflation was still hovering around 5.1%. That's way above the bank's 3% target. When interest rates stay high in Colombia while they drop in the US, investors move their money into pesos to chase those higher returns. This "carry trade" is a big reason why the peso has actually strengthened recently.
But there’s a catch. High rates make it expensive for Colombians to buy houses or for businesses to expand. It’s a delicate balance.
The Fiscal "Emergency" Factor
You can't talk about the Colombian peso to US dollar exchange rate without mentioning the budget drama. In late December 2025, the Colombian government hit a massive roadblock. They couldn't get their "Financing Law" through Congress.
This left a giant hole in the 2026 budget.
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The Finance Minister didn't mince words, even mentioning a potential "economic emergency" to secure funds. Whenever a government struggles to pay its bills or pass a budget, international investors get spooked. They start asking, "Is my money safe here?" If the answer is "maybe," they sell pesos and buy dollars.
Real-World Impact: From Coffee to Coffee Shops
If you’re an expat living in Colombia, this shift is a double-edged sword. A stronger peso means your US pension or remote salary doesn't buy as many empanadas as it did two years ago.
- For Travelers: Colombia is still affordable, but it's no longer the "everything is 50% off" fire sale it was when the dollar hit 5,000 pesos back in late 2022.
- For Exporters: Coffee growers and flower exporters (Colombia is the world's second-largest flower exporter!) are hurting. They get paid in dollars, but their costs—labor, transport, fertilizer—are in pesos. When the dollar drops, their profit margins vanish.
- For Locals: A stronger peso helps keep the price of imported electronics and cars from skyrocketing, which is a small mercy given the high cost of living.
The 2026 Outlook: Where Do We Go From Here?
Experts are split. Some, like the folks at BBVA Research, think the peso will eventually settle back toward the 4,000 to 4,200 range by the end of 2026 as the central bank finally starts cutting rates.
Others argue that if the government fixes the fiscal mess and oil prices stay stable, the peso could stay "expensive" (below 3,800) for a long time.
The big wild card is the minimum wage. For 2026, the government pushed through a 23% increase. That’s huge. While it’s great for workers, it’s an absolute nightmare for inflation. If prices start surging again because businesses are passing on those labor costs to consumers, the central bank will have to keep interest rates high.
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And high rates usually mean a stronger peso.
Actionable Steps for Navigating the Peso
Don't just watch the numbers dance on the screen. If you're managing money across borders, you need a plan that accounts for this volatility.
Watch the BanRep Meetings The central bank meets regularly to decide on rates. Their next big move is expected in late January 2026. If they hold rates at 9.25% again, expect the peso to gain strength. If they finally cave and cut rates by 50 basis points or more, the dollar will likely jump.
Hedge Your Big Purchases If you're buying property in Cartagena or Medellín, don't wait for the "perfect" rate. It doesn't exist. Use a "limit order" with a transfer service like Wise or Revolut. Set a price you’re happy with—say, 3,850—and let the system execute the trade automatically if the market hits it.
Factor in "Hidden" Costs Remember that the "interbank" rate you see on Google isn't the rate you get at a casa de cambio in a mall. In Colombia, physical cash exchanges often have a spread of 100 to 200 pesos. For the best deal, use an ATM from a reputable bank like Davivienda or Bancolombia, but always decline the "convenience" conversion offered by the machine. Let your home bank handle the math.
Diversify Your Income If you're a business owner in Colombia, start looking at ways to earn in multiple currencies. The volatility of the Colombian peso to US dollar pair is a permanent feature, not a bug. Relying solely on one side of the coin is a recipe for a stressful year.
Stay liquid, keep an eye on the inflation reports coming out of DANE, and don't assume the current "strength" of the peso is a permanent trend. In the world of emerging market currencies, the only constant is that everything can change in a single news cycle.