Colombia’s Cheap Dollar Is Hiding a Fiscal Hole
For anyone with real experience in finance, a strong currency is not the same thing as a healthy state. Colombia confirmed that again this week, on the same day, with two stories almost nobody is reading together: the central bank announced it will buy up to USD 4 billion to prop up the peso, and, that same day, Colombia’s fiscal watchdog calculated a 32.1 trillion peso gap against this year’s target.
What’s Actually Real
The peso closed August 25 at 3,056 pesos per dollar, its strongest level of the month. The central bank already announced it will buy up to USD 4 billion to put a floor under that slide, and held its policy rate at 12% even though most analysts expected otherwise. All of that is real and verifiable, and — let’s be honest — it feels good. A year of watching the dollar get cheaper after so long being expensive is a relief for anyone who imports, travels, or owes money in dollars. I learned years ago, reviewing corporate FX hedges, that relief is exactly the moment people stop asking why something is happening — and that’s where the expensive mistakes get made (we’re tracking this same move in today’s Daily Briefing).
What Nobody’s Connecting
What almost nobody is connecting is that this same strong peso is sitting on top of a fiscal hole. Colombia’s own fiscal rule watchdog, the CARF, calculated a 32.1 trillion peso gap against this year’s target. Moody’s already projects the deficit will top 6% of GDP for a third straight year — and noted, almost in passing, that whatever spending discipline is missing this year will likely fall to the next administration, not this one. The watchdog didn’t soften it: “absent effective spending cuts, debt would resume an upward path.” A strong peso today isn’t coming from public finances being in order. It’s coming from the rate differential and from the central bank literally buying dollars to hold the line, one auction at a time. That can reverse faster than anyone wants to admit, and when it does, you won’t get advance notice — currency moves rarely send a memo first.
The Real Opportunity
Colombians already lived this script in reverse, just a year ago, and solved it without anyone teaching them how. When the peso lost 5.3% of its value in 2025, people didn’t wait for the central bank to act — they moved into digital dollars on their own. Today nearly 40% of crypto transactions across the region are in stablecoins — USDC and USDT — per Bitso’s own data, and a meaningful share of Colombian users already hold multi-asset portfolios, among the most diversified behavior in the region. This isn’t cycle-driven speculation anymore; it’s routine financial management. As Bitso’s Colombia country manager, Juanita Rodríguez Kattah, put it: “the question for 2026 isn’t whether crypto adoption continues, it’s how the financial infrastructure around it transforms.” And right now, while everyone relaxes because “the dollar is cheap,” the government has a bill ready that would recognize digital assets as legitimate for the first time, complete with a regulatory sandbox and the central bank overseeing stablecoins on monetary-sovereignty grounds. The real opportunity isn’t buying cheap dollars — everyone’s about to do that anyway. It’s building, now, the stablecoin or digital-asset hedge you’ll need the next time that rate differential flips, because the fiscal numbers are already telling you that day is coming.
I’ve never believed you should wait for the crisis to prepare for it — that’s really what having your own judgment in finance comes down to. So here’s the question I keep asking myself, and I’ll leave it with you: are you going to wait for the peso to fall again before you hedge, or are you going to use this week — while everyone’s celebrating the cheap dollar — to build the coverage that a 32-trillion-peso fiscal hole already announced?
Want to keep watching what happens once that rate differential starts to move? Subscribe to the ViSFI Daily Briefing: we track the dollar, the debt, and the fiscal accounts every day, same judgment as always, no noise.