Colombia’s central bank raised its policy rate to 12.25% on Wednesday, Sept. 30, lifting the peso and making borrowing more expensive. Higher local rates made peso deposits and bonds more attractive to foreign investors, and the peso traded as strong as 3,269 per U.S. dollar the following morning.
The day’s official reference rate was 3,312.84 pesos per dollar, down from 3,341.23 a day earlier. La República and Portafolio linked the currency’s gains directly to the rate decision.
Who Gains, Who Pays
Most analysts expected the central bank to hold rates, but four of seven board members backed the quarter-point increase. Two voted to hold, and one wanted a half-point hike. The decision lifted the benchmark from 12% to 12.25%.
Higher rates made peso deposits and bonds more attractive to foreign investors while raising borrowing costs. Peso earners can pay less for imported goods and travel when the currency strengthens; people earning dollars receive fewer pesos. According to La República’s comparison of reference rates, a U.S. trip cost 14.3% less in pesos than a year earlier.
The peso had weakened earlier in September. Portafolio reported that the dollar rose 3.40% against the peso between Sept. 18 and 25, moving from 3,183 to 3,291 pesos. On Oct. 1, La República recorded a morning trading range of 3,269 to 3,346, with about US$793 million traded.
Factory Growth, Temporary Hiring
Colombia’s Davivienda Manufacturing PMI rose to 54.6 in September from 54.3 in August, S&P Global reported on Oct. 1. A reading above 50 signals improvement from the prior month. The result marked the strongest reading since October 2025 and the fifth consecutive monthly increase in output.
New orders strengthened, with growth among the strongest since the survey began in April 2011. Firms reported new customers and larger orders from existing clients. Many attributed orders to “reduced market uncertainty following the election result,” S&P Global wrote.
Manufacturers increased purchasing at the fastest rate on record, while finished-goods stocks fell as companies sold from warehouses to meet demand. Employment rose for a sixth consecutive month, mainly through temporary hires. Hiring still continued, but its pace eased to a four-month low.
The survey covers orders, output, jobs, delivery times and stocks, and draws on about 350 manufacturers. Banco Davivienda, which describes itself as Colombia’s second-largest bank by loans, commissions the survey. Its long-run average since 2015 is about 50.9.
Input costs rose at the slowest rate in nine months, but firms still reported higher prices for fabrics, foodstuffs, petroleum-based products and raw materials. Factory selling prices also rose more slowly than their long-run average, as some firms held back increases to win sales.
Rate Policy and Fiscal Talks
Davivienda’s chief of economic research, Germán Cristancho, called manufacturing momentum “outstanding” and its resilience “particularly interesting” against “the moderation currently observed in other areas of the economy.” He cited retail sales and credit disbursements; borrowing costs were also rising.
Central bank governor Leonardo Villar said inflation remained “very far from the target.” The PMI report cautioned that its reading didn’t mean the whole economy was booming or guarantee factory momentum would continue as higher rates fed through. Retail sales and credit were moderating.
Separately, IMF deputy managing director Nigel Clarke met Colombian officials in Bogotá from Sept. 25 to 28, including Vice President José Manuel Restrepo, Finance Minister Miguel Gómez and Villar. The sides agreed to no loan, credit line or programme. They opened technical working sessions on possible Fund support for a fiscal adjustment, and Clarke called the discussions “very productive and frank.” The government had asked the Fund to bring forward its routine annual review; whether talks would lead to a formal programme, and on what terms, remained unclear.