Three very different currencies are moving the same direction against the US dollar right now — and for three very different reasons. The Japanese yen, the Mexican peso, and the Colombian peso have all strengthened sharply in the past week, even though the forces pushing each one higher have almost nothing in common.
The Numbers So Far
| Currency | Recent Move vs. Dollar | Key Driver |
|---|---|---|
| Japanese Yen | +2% over the past week (strongest since July) | Rising bets on another Bank of Japan rate hike |
| Mexican Peso | USD/MXN slipped below 16.90, near multi-year strongest levels | Continued “super peso” momentum |
| Colombian Peso | USD/COP fell to ~3,136, down about 2.7% from late August | High interest rates, rising oil prices, pro-investment policy signals |
Why the Yen Is Rallying
The yen’s move has been the most dramatic of the three. It gained roughly 2% against the dollar over the past week — its strongest weekly performance since July — after traders rapidly increased their bets that the Bank of Japan will raise interest rates again. A higher Japanese rate narrows the gap with US rates, making yen-denominated assets more attractive and pulling money back into the currency.
Why Colombia’s Peso Is Outperforming
The Colombian peso’s strength comes down to a combination of high yields and oil. Colombia’s central bank, Banco de la República, has held its benchmark rate at 12% after raising it by 75 basis points in June, with officials citing elevated inflation — headline inflation stood at 6.1% in June — as the reason for staying restrictive. That high policy rate creates a strong yield advantage for investors willing to hold Colombian assets.
Oil adds a second tailwind. Colombia’s peso tends to strengthen when oil prices rise, since petroleum remains one of the country’s most important exports. Brent crude has recently traded above $90 a barrel, pushed higher by supply concerns linked to renewed US-Iran tensions. On top of that, Colombia’s government has signaled a more supportive stance toward oil and mining investment after several years of declining exploration activity, adding a domestic catalyst on top of the global one.
Mexico’s “Super Peso” Holds Its Ground
The Mexican peso’s strength is less of a sudden move and more a continuation of a trend that’s earned it the nickname “super peso” — USD/MXN has slipped below the 16.90 level, keeping the currency near its strongest levels in years even as broader emerging-market currencies see mixed performance.
The Common Thread: A Weaker Dollar
While each currency has its own specific story, all three moves are happening against a backdrop of broader US dollar softness. When the dollar weakens broadly — often tied to shifting expectations around Federal Reserve policy — it tends to lift a wide range of currencies at once, even ones with very different underlying fundamentals. That’s part of why yen strength driven by Bank of Japan expectations and peso strength driven by Colombian oil exports can show up in the headlines during the very same week.
What This Means in Practice
- For travelers and remittance senders: A stronger peso or yen means fewer local currency units per dollar sent or exchanged — Mexican and Colombian families receiving remittances, for example, are getting less local currency for each dollar than they would have during a weaker-peso period
- For exporters: Colombian oil and commodity exporters earn fewer pesos per dollar of export revenue when the peso strengthens, even as the broader economy benefits from lower import costs
- For investors: High-yield emerging-market currencies like the Colombian peso remain attractive to foreign capital as long as the rate differential versus the US holds, but that advantage can reverse quickly if the Federal Reserve or Banco de la República shift their policy stance
Final Thoughts
The yen, the Mexican peso, and the Colombian peso rallying together makes for an eye-catching headline, but the underlying story is really three separate ones — a central bank policy shift in Japan, sustained momentum in Mexico, and a combination of high rates and oil strength in Colombia — all playing out at the same time against a softer US dollar. Whether this alignment holds will depend largely on how the Federal Reserve, the Bank of Japan, and Banco de la República each move from here.
