Colombian Peso Soars as President Petro’s Tax Hike Plans Stall

The Colombian peso is soaring as the country’s President Gustavo Petro fails to fulfill his campaign promise of raising taxes.

The Colombian peso is currently the best-performing currency in all of Latin America. In the second week of August, the peso appreciated 19% to reach a value of 3,963 units per dollar, according to market data from Bloomberg.

The peso suffered a free fall in October last year when Petro began talking about raising taxes to fund his mammoth social welfare programs. The currency fell 30% to trade at 500 units per dollar as the leftist leader vowed to end new oil exploration.

Colombia’s Lower House recently terminated discussions on tax increases, creating a significant obstacle for Petro to launch his extensive social assistance program. Investors now anticipate that the President will not be able to hike taxes as much as previously thought.

A recent indictment on his son in a corruption scandal has also put a damper on Petro’s plans to reform labor and pension laws.

What was bad news for Gustavo Petro turned out to be good news for the Colombian peso, nonetheless.

In addition to political developments, the rising oil prices are also contributing to the peso’s rise. Colombia is one of the largest exporters of oil, and the higher oil prices are boosting the country’s export revenue.