Colombia: Dollar Volatility & Export Concerns – 2026 Outlook

The first half of January 2026 has demonstrated that the exchange rate for the U.S. dollar is facing periods of high volatility, driven by both global and domestic economic and political events.

As of this weekend, the Representative Market Rate (TRM) is $3,700.05, one of the lowest values in the last two years. A year ago, the rate stood at $4,344.27 – a difference of $644.22 – and on January 18, 2024, the TRM was $3,969.50, $269.45 higher than the current quotation.

The TRM has not exceeded $4,000 in over four months, with the most recent peak reaching $4,002.86 on September 4, 2025.

Colombian export trade groups and businesses estimate the exchange rate variation over the past year represents an approximate 17% appreciation of the peso. This movement, they say, directly impacts exporting companies, putting pressure on their margins due to reduced peso revenues.

The situation, they added, discourages new investment and puts formal employment at risk, particularly in labor-intensive sectors and regions where exports are a primary economic driver. Rising labor and tax costs for businesses are compounding the challenge.

A joint statement from Acolfa, Acoplásticos, Analdex, Andesco, Andi, Asocolflores, Asoexport, Augura, Corpohass, Cotelco, Fedecafé and Fedeseguridad, points out that a stronger peso also makes imported goods cheaper, increasing the appeal of substituting domestic production with foreign purchases.

According to the trade groups, local producers are facing increased competition from imports, which are arriving at lower prices – not necessarily due to greater efficiency or higher quality, but as a result of the exchange rate.

Prolonged exposure to this dynamic, they warned, could lead to a loss of market share for domestic industry, reduced installed capacity, and, in some cases, irreversible disinvestment.

Business organizations noted that recent government financing operations and debt management, both domestically and internationally, have coincided with an accelerated appreciation of the peso.

Specifically, they highlighted local placements with high participation from foreign investors and external operations that, by attracting capital flows into peso-denominated assets or requiring currency conversions to meet urgent cash needs, have increased the supply of dollars in the foreign exchange market.

These moves are putting downward pressure on the exchange rate and directly affecting export competitiveness and tradable production. If this continues, exporters could lose markets that would be difficult to regain, they cautioned.

The groups expressed concern that debt financing is replacing structural decisions regarding fiscal adjustment. Delaying control of public spending in a scenario of insufficient tax collection is irresponsible, they said, as it increases reliance on new issuances, elevates fiscal vulnerability, and transfers costs to the productive sector.

These costs, they added, are reflected in an appreciated exchange rate, lower export profitability, and increased risks to investment and formal employment.

Additionally, the groups voiced their concern regarding a draft decree that would require pension funds to repatriate a significant portion of resources invested abroad to the local market.

If implemented mandatorily, they warned, this measure would increase financial risks by limiting the international diversification of portfolios.

It could also increase the supply of foreign currency and deepen the downward pressure on the exchange rate, further affecting the competitiveness of exports, tradable production, savings returns for Colombians, and the stability of the financial system.

Therefore, they insisted that any adjustments to investment regimes should be based on technical analysis and clear rules, avoiding short-term decisions that transfer costs to the productive sector and affiliates.

Finally, the groups reiterated the need to move towards a credible path of fiscal consolidation, prioritizing efficiency and targeting of public spending, as well as a comprehensive strategy to strengthen revenue collection without affecting formality or competitiveness.

The goal, they concluded, is for the exchange rate to maintain its function as a buffer for the economy and not become a structural disincentive for tradable production and sustainable growth.

Javier Díaz Molina, president of Analdex, the foreign trade association, voiced support for the statement expressing concern over the Petro government’s borrowing policies.

“That policy of indebtedness has grown the debt extraordinarily, and particularly loans in foreign currency have been taken, which are affecting the exchange rate. The price of the dollar, we could say, is an artificial rate affected by this issue of external debt,” Díaz commented.

He emphasized that this is serious not only for exporters, but also for all domestic producers competing with imports, as imported products are now much cheaper.

“Exporters are affected because their cost structure grows in pesos, but their income in pesos decreases, affecting the competitiveness of the Colombian export sector,” Díaz emphasized.

Santiago Martínez, an economic analyst at Davivienda, explained that the exchange rate closed 2025 at $3,780, representing a 14.2% appreciation compared to the close of 2024.

The dynamics during the last month of the year were driven by monetizations from the Ministry of Finance, which caused distortions in the foreign exchange market and periods of high volatility.

However, this dollar behavior in Colombia remains detached from fundamental economic variables, given the deterioration of public finances, the increasing trade deficit approaching US$16 billion, expectations of a potential drop in oil prices below US$60 per barrel, and a challenging business environment with high interest rates and rising wages.

However, the expert believes that the exchange rate has favorable variables that could reduce the magnitude of the currency devaluation, including a possible increase in the interest rate differential, increased remittance flows, and expectations for congressional and presidential elections.

According to the financial institution’s estimates, the TRM average for January would be $3,855, with a trading range between $3,680 and $3,920.

The estimates indicate that the most impactful variables on the exchange rate this month would be the past performance of the local exchange rate and the price of Brent oil.

Another aspect to consider is that the weakness of the global dollar will also be pressured in the coming months by the lower appetite for U.S. debt assets, given that China has accelerated its process of selling U.S. Treasury bonds, and since the beginning of 2025, the country’s share among the largest holders of debt has gone from 9% to close to 7.5%.

This is not only due to the Asian giant’s appetite for less dependence on dollar-denominated assets; but also a general market trend, which has decreased investment flows in this country’s debt, amid the fiscal deterioration of U.S. public finances, which could continue to worsen in the future as warned by entities such as the Congressional Budget Office.

The research department of Grupo Cibest believes that the global dollar will continue to weaken due to the process of monetary easing in the U.S., which would discourage long positions in this currency.

“However, the fiscal deterioration, due to high indebtedness and rigid spending, will limit the appreciation of the currency, while the electoral process will add volatility to the market in the first half of the year,” the financial entity noted.

“While the expectation of a government more inclined towards regulatory certainty could incentivize the positioning of foreign investors in the country, the scenario remains highly uncertain. Given this outlook, we anticipate the dollar will average $3,878 this year, representing a 4.3% appreciation compared to 2025 when it stood at $4,054.”

Germán Bahamón Jaramillo, manager of the National Federation of Coffee Growers, explained that the effect of the dollar exchange rate is straightforward. Over the past year, according to the executive, the exchange rate has appreciated by approximately $746 per dollar, meaning each coffee load now receives between $500,000 and $550,000 less solely due to exchange rate effects.

In other words, the producer sells the same coffee, with the same quality and effort, but receives half a million pesos less per load.

“For many, this sounds like good news, but for a country that lives from producing and exporting, such a rapid revaluation has a real cost: we lose competitiveness and the income of those who generate foreign exchange and economic development is reduced,” Bahamón warned.

The problem is exacerbated because the revaluation comes at a time of rising costs. Coffee growers now receive fewer pesos for each dollar exported, while facing a complex combination: persistent inflation, a higher minimum wage, and high interest rates during 2026. This mix reduces profit margins and puts investment and future production at risk. According to the Federation, “we are not asking for privileges, but to protect rural income, employment, and exports,” key pillars of the Colombian economy.

From Augura, the banana growers’ association, the sharp change in the dollar results in a loss of competitiveness for Colombian fruit in international markets.

Émerson Aguirre, president of the association, clarified that the concern is about what will happen in the medium term, and pointed out that in this activity from October to December, supply contracts for the following year are signed.

“In our case, from October to December 2025, the 2026 contracts were signed, and we already have commercial commitments to sell almost 95% of the fruit. However, we are already perceiving a lower income in dollars,” he explained.

He also lamented that although there are financial instruments for exchange rate coverage, those being offered adjust to what is seen in the market, that is, coverage between $3,600 and $3,800, where premiums are higher. “At this time, the instruments fall short of the existing needs,” Aguirre added.

Despite the concerns raised by the current exchange rate, a favorable expectation is seen in the agro-industrial zone of Urabá, where there has been very good rainfall, which would allow anticipating good production performance.

Augusto Solano, president of Asocolflores, maintains that this sector is perhaps the most affected by the revaluation because practically all of its production – 97% or more – is exported, and all exports are made in dollars regardless of whether they go to the United States, Europe, or Asia.

The executive explained that a variation or a fall in the exchange rate of $100 means lower income for floriculture of $250 million, which is a gigantic impact of the revaluation on the floriculture industry.

“But we have to look at this issue of revaluation in the context of the increase in the minimum wage, where floriculture is also one of the sectors most impacted. This is a country where there is 85% informal labor in the field,” he highlights.

He adds that it is labor-intensive, so between 50% and 60% of the activity’s cost structure corresponds to labor costs, so what is happening with the exchange rate threatens the stability of 150,000 formal jobs.

“Therefore, a persistent revaluation, an uncontrolled increase in labor costs, and tariffs of US$200 million are a very worrying situation,” Solano concluded.

Gustavo Gómez, president of the Coffee Exporters Association (Asoexport), detailed that while the exchange rate has fallen sharply, the price of the bean on the exchange has compensated for that contraction, and the country still maintains an internal price of the load close to $2.6 million, which still covers costs and generates income for the coffee producer.

“What must be taken into account is that in addition to reducing income due to the exchange rate, there is an increase in the minimum wage, which causes costs to increase both in production and in marketing and export, which makes margins much narrower,” he said.

He insists that in this context, it is increasingly difficult for the exporter to find the level with which they can cover their export costs, especially in a scenario of so much uncertainty and with days when the dollar falls $100 and the exchange rises ten or twenty cents, making it difficult to protect themselves from the market.

“What we have always asked for is stability in the rules of the game, and with that stability we can function, but the latest measures and decisions of the government have made this export operation more difficult,” Gómez stated.

Although the private security sector, grouped in Fedeseguridad, does not face a direct effect from what happens with the exchange rate, companies in this industry are concerned about the impact the currency’s volatility will cause among their clients.

“People think that in private security, the niche that hits the hardest is residential, but really it is industrial and commercial. So, when their numbers are altered, it immediately affects us because there is a reduction in the request for services,” commented Raquel Garavito, president of Fedeseguridad.

She indicates that the rates for the security business are calculated in “man-hours/post,” and what is starting to happen in situations like the current one is that users are cutting back on hours.

“The reason we signed the letter from the various trade associations is more because the impact that will affect other entrepreneurs will affect us as a result,” Garavito explained.

Thus, Fedeseguridad and other associations are seeking an approach with the National Government to address these concerns, understanding that what happens with the dollar market must be added to impacts derived from the entry into force of labor reform and, more recently, the high increase in the minimum wage.