As the Colombian peso crashed in the weeks before now President Gustavo Petro took office last year, he warned people they would lose money if they bet against his government. This year, the peso has climbed 22% this year.
For the president, though, the rally is not really happening for the right reasons. The currency has been buoyed by higher prices for Colombia’s oil exports, which Petro wants to phase out, and one of the world’s highest interest rates, which he is pressuring the Central Bank to cut.
At one point, he predicted on Twitter that Colombians who were buying US dollars to hedge against the peso would lose out in the long run. “Watch out!” he wrote, “Don’t lose your money.”
Felipe Pianetti, a portfolio manager on Lazard Asset Management’s Emerging Markets Debt team in New York, traces a direct, inverse relationship between Petro’s approval rating and the peso’s strength. The less popular he becomes, the harder it is for him to pass his reforms.