The Colombian peso (COP) is the official currency of Colombia. It has been in circulation since 1837 when Colombia was known as Republic of New Granada. The peso has played an important role in Colombia’s economy for almost two centuries.

This in-depth guide will provide a comprehensive overview of the COP including its history, exchange rates, forecasts and everything you need to know about trading the Colombian peso.

A Brief History of the Colombian Peso

The peso has been the currency of Colombia for most of the country’s history since its independence from Spain in 1810. The first peso was introduced in 1837 when the Republic of New Granada, now Colombia, began minting coins under a new monetary system.

At the time, the peso was equal to 8 reales or 1/2 of the Spanish dollar. It replaced the real as the official currency. The peso was divided into 10 reales, each real was subdivided into 10 decimos, making 100 decimos equal 1 peso.

In 1847, the New Granada pesos were replaced with coins denominated in centavos, with 100 centavos equal to 1 peso. This model was based on the decimalization of currencies trend happening globally.

In 1871, the United States of Colombia was formed and introduced paper money denominated in peso for the first time. Gold coins known as Condor were also minted.

After Colombia separated from Panama in 1903, the country entered the Gold Standard period, fixing the peso’s value to the British Sterling at a rate of 1 pound = 5 pesos.

In 1931, Colombia abandoned the Gold Standard and allowed its currency to float freely. The peso was briefly pegged to the US dollar between 1937-67 at a rate of 1 USD = 1.05 COP.

In 1994, the “new peso” was introduced, with 1,000 old pesos exchanged for 1 new peso. This was done to combat inflation as hyperinflation had eroded the value of the old COP.

Today, the Colombian peso still floats freely and its value is determined by the foreign exchange markets based on supply and demand. The Central Bank sometimes intervenes to control excessive volatility.

COP Exchange Rates, Past and Present

As an independently floating currency, the exchange rate of the Colombian peso is determined by the forex markets. It has undergone several major fluctuations in value over the decades.

Historical Exchange Rates

Here’s a quick overview of the COP’s exchange rates against the US dollar over the past century:

  • 1930s – Avg. 1 USD = 0.97 COP under gold standard
  • 1960s – Avg. 1 USD = 17 COP fixed rate
  • Early 1980s – 1 USD = 55 COP high inflation eroded peso
  • January 1994 – 1 USD = 950 COP pre “new peso”
  • Mid 1990s – 1 USD = 1,000 to 1,700 COP post currency overhaul
  • Early 2000s – Avg. 1 USD = 2,500 to 2,800 COP peso depreciation
  • 2005 to 2014 – Avg. 1 USD = 1,800 to 2,000 COP range trading
  • 2015 – Present – Avg. 1 USD = 3,000 to 3,500 COP peso depreciation

This shows the extreme volatility and depreciation the COP has experienced from high inflation rates and economic instability in certain periods.

Current COP Exchange Rate

Currently, the exchange rate for the Colombian peso is around:

  • 1 USD = 3,982 COP
  • 1 EUR = 3,598 COP
  • 1 GBP = 4,150 COP

The US Federal Reserve’s interest rate hikes have strengthened the dollar and caused the COP to weaken considerably in 2022-2023. As of August 2023, the USDCOP rate is testing all-time highs.

Analysts expect the peso may continue weakening if the US continues raising interest rates aggressively to fight inflation. However, the COP could stabilize if the US economy slows down.

Factors That Influence the Colombian Peso’s Value

There are several key domestic and external factors that impact the valuation of the COP forex pair:

Colombia’s Economy and Markets

As an emerging market, Colombia’s economic growth prospects significantly influence the peso’s value. Stronger than expected GDP growth or increases in exports/oil revenues leads to COP appreciation. Slower growth, higher unemployment, and falling commodity exports causes the peso to weaken.

Domestic consumption and investment activity, inflation trends, central bank policy changes, credit rating upgrades/downgrades, and political stability also impact the currency.

Dollar Strength or Weakness

The US dollar’s performance as the world’s reserve currency has an outsized influence on the COP. When the dollar strengthens due to higher US interest rates or safe haven demand, the COP usually depreciates.

Conversely, dollar weakness on lower US rates or shifting risk appetite causes COP to appreciate. This was evident in 2020 when the Fed slashed rates to 0%, causing a broad dollar selloff and COP rally.

Oil and Commodity Prices

As a major oil producing nation and commodity exporter, the prices of crude oil, coal, coffee, emeralds and other resources Colombia exports significantly sways the peso’s value.

Higher commodity prices lead to higher export revenues for Colombia and COP appreciation. Falling prices have the opposite effect of reducing income and weakening the currency.

Risk Sentiment and Emerging Market Capital Flows

Shifts in investor risk appetite and capital flows to emerging markets impacts the COP. When global growth outlook worsens or volatility spikes, investors unload riskier assets like the COP.

In periods of low volatility and hunt for yield, the COP and Colombian assets benefit from investment inflows.

Benefits and Risks of Trading COP Forex

Here are some of the key advantages and disadvantages to keep in mind when trading the Colombian peso:


  • Emerging market currency offers higher volatility and potential returns
  • Colombia’s economy is growing faster than developed nations
  • Ability to profit from oil and commodity price moves
  • Diversification from highly correlated major currency pairs


  • High volatility from COP can produce large losses fast
  • Liquidity can dry up rapidly during volatile periods
  • COP prone to large swings from political and economic instability
  • Prolonged trend moves against USD or oil prices can wipe out accounts

Overall, while the COP does present opportunities, traders should be aware of the amplified risks and volatility associated with this exotic currency pair. Proper risk management is essential.

Outlook and Forecast for the COP in 2023

As we move through 2023, here are some of the likely scenarios that may unfold for the Colombian peso:

Further Weakness

Most analysts expect the COP to remain on a weakening path against the USD near-term as the Federal Reserve continues hiking rates aggressively to combat stubbornly high US inflation.

This dollar strength should pressure the COP lower, with technical targets around 4,200 to 4,500 per USD in place.

However, as front-loading rate hikes slow US growth in 2023, easing inflation could allow the Fed to pause rate hikes, leading to some COP recovery in H2 2023.

Colombia’s Growth Trajectory Important

Colombia’s GDP growth is projected around 1.5% to 2% in 2023. If the economy can achieve this expansion or better, it would be positive for the COP.

However, risks remain, including spillover from recessions in the US or Europe. Slower than expected domestic growth would negatively impact the currency.

Political Environment in Focus

Colombia elected leftist leader Gustavo Petro as President in 2022. His policy agenda has fueled some uncertainty, although he has moderated views recently.

Investors will watch his economic policies closely for any negative impacts that could weigh on the COP.

Technical Analysis Signals Can Help Time Trades

While fundamental trends dominate, technical indicators can help identify oversold conditions and opportunities to enter favorable swing trades on the COP.

Levels like the 200-week moving average near 3,800 could offer support on pullbacks.

Key Things to Know When Trading the Colombian Peso

When trading the COP forex pair, keep these tips in mind:

  • Monitor oil and commodity prices closely as they impact the COP.
  • Keep up with Colombia’s economic data releases, especially GDP, trade, and inflation reports.
  • Follow the USD index and US interest rate changes which affect the dollar’s value.
  • Watch out for political unrest, tax/policy changes that could spark volatility.
  • Use wider stops and avoid overleveraging due to the currency’s heightened volatility.
  • Trade during New York/Colombian overlap for best liquidity and lowest spreads.

How to Trade COP – Tutorial and Tips

Now let’s discuss how to actually trade the COP forex pair in practice:

Step 1: Choose a Forex Broker That Offers the COP

  • Select an established, well-regulated broker.
  • Open a standard forex trading account that provides COP trading.
  • Fund your account via bank wire transfer or e-wallet services.

Step 2: Analyze the Fundamentals Driving COP Price Action

  • Check Colombia’s latest economic data releases.
  • Follow oil and commodity price moves.
  • Monitor USD price swings and rate hike expectations.
  • Stay up to date on Colombia’s political environment.

Step 3: Deploy Technical Analysis to Pinpoint Trading Levels

  • Use price action analysis on COP/USD daily, 4-hour charts.
  • Identify support and resistance levels to watch.
  • Utilize moving averages to define trend.
  • Watch RSI, MACD for overbought/oversold readings.

Step 4: Place Your COP Forex Trades

  • Consider trading size and set proper stop-loss orders.
  • Execute COP buy trades near key support levels.
  • Enter sell trades as price reaches resistance points.
  • Close out winning positions at technical targets.
  • Stick to your trading plan and risk parameters.

Step 5: Manage Your COP Forex Trades

  • Actively monitor open COP positions, stay agile.
  • Move stops to lock in some profits as trades move favorably.
  • Consider partial profit taking to ride out trend moves.
  • If trade moves against you, exit quickly using stops.
  • Don’t add to losing COP trades on a hope and prayer.

Proper analysis, risk management, and trading psychology are essential for trading the volatile Colombian peso successfully long-term.

Trading the COP Crosses With Other Currencies

While trading the COP against the US dollar is most common, you can also trade COP crosses with other major currencies including:

EURCOP – Euro vs. Colombian Peso

GBPCOP – British Pound vs. Colombian Peso

AUDCOP – Australian Dollar vs. Colombian Peso

CADCOP – Canadian Dollar vs. Colombian Peso

MXNCOP – Mexican Peso vs. Colombian Peso

These crosses enable unique opportunities to capture swings between the COP and currencies like the commodity-driven Canadian dollar or the European euro.

Pay attention to the underlying forex pairs like EURUSD and economic divergences between the cross currencies.

Final Word on Trading the Colombian Peso

The Colombian peso has endured many ups and downs over its long history. While volatile, the COP provides traders exciting opportunities within the exotic forex market.

By utilizing sound technical and fundamental strategies, keeping risk controlled, and staying up to date on Colombia’s economy and global markets, you can find success trading the Colombian peso over time.

It’s important to be selective and patient trading the COP – not every price swing needs to be traded if the conditions aren’t optimal. Master the basics and size your risks appropriately.

So read up on the peso, follow the markets closely, and get ready to ride the undulations of this time-tested South American currency.