Colombian Peso Strengthened Amid Strong Manufacturing Data and Oil Prices Rally

By Quasar Elizundia, Expert Research Strategist, Pepperstone

 June 4, 2025 

The Colombian peso appreciated on Tuesday amid stronger-than-expected domestic manufacturing data and rising global oil prices. The Davivienda Manufacturing PMI rose to 52.6 in May, up from 51.4 in April, marking the highest level since January and signalling a solid improvement in the health of the sector.

The report highlighted a surge in new orders and job creation, with businesses expanding staff at the fastest pace in five months. This labor market strength suggests that production capacity is recovering, potentially boosting household income and domestic demand. If sustained, this dynamic could support broader economic growth and reinforce the peso’s strength through improved internal balances.

Meanwhile, oil prices extended gains as geopolitical risks escalated. Persistent tensions in Ukraine and Iran, alongside Canadian supply disruptions, are fueling crude’s upside. For Colombia, this could strengthen the external balance and improve fiscal revenues, key factors in maintaining peso resilience.

Looking ahead, market focus turns to Thursday’s PPI data. Persistent cost pressures could affect monetary policy. A shift toward a more cautious policy stance could enhance the peso’s carry appeal in the near term.