beyondbrics

China’s modest appreciation of the renminbi has set markets all aflutter. Meanwhile, on the other side of the globe, Colombia has long been doing its bit for global rebalancing – its currency is the world’s best performing this year.

The slamdunk presidential victory of Juan Manuel Santos last night is likely to see the peso only continue to rise – a bullish signal for local equities, bonds and a reflection of continued foreign investment interest.

Royal Bank of Scotland analyst Siobhan Morden echoes a common view:

“These elections not only infer policy continuity on conservative fiscal, FX and monetary management, but also the prospects for structural reform with President-elect Santos expected to benefit from an overwhelming majority of 75% in congress…. This is reflected in the recent gains and outperformance of [the peso] with relative outperformance likely to continue on prospects of ratings upgrades and convergence to the high grade pack.”

Mr Santos, a former defence minister who won 69 per cent of the vote, is the heir of current President Álvaro Uribe – whose tough stance against Marxist guerrillas has made Colombia the strongest US ally in the region, and whose pro-business reforms have meanwhile made him the darling of Colombian and foreign businesses. Mr Santos says that he not only plans to continue this approach, but deepen it. And with more Colombians voting for him than they ever did for Mr Uribe – 9m in all – he has the mandate to do so as well.

Mr Santos is still assembling his team, but Colombia’s next finance minister is likely to be Juan Carlos Echeverry. Mr Echeverry is the current president of Econcept, a Colombian consulting firm, a former economic planning minister, an economics lecturer at Bogota’s Universidad de los Andes and holds a doctorate in economics from New York University.

Mr Santos has said he wants to achieve annual economic growth of 6 per cent, and close a budget gap equivalent to 4.4 of GDP – all without raising taxes. You can’t get much more orthodox than that.