FXStreet (Córdoba) - The Colombian peso is likely to drop further against the US dollar according to analysts from Brown Brothers Harriman, that also note the strong correlation between the peso and crude oil prices. Key Quotes: “The takeaway from the recent price action in the Colombian peso seems to be that oil prices continue to overpower interest rates and FX intervention as the currencies main driver.” The peso has been by far the worst performing major EM currency so far this month. It is down over 6% against the dollar, almost twice as much as the South African rand over the same time period. “Aside from the well documented dependency of Colombia’s budget on oil prices, the current account has also been in focus. The Q2 deficit improved considerably compared with Q1, narrowing to -$4.3 bln from -$5.1 bln. On a year-on-year basis, however, the numbers look very poor.” “At this point, we don’t see any indication of a decoupling between the peso and oil. Unlike the case of Mexico, for example, Colombia does not seem well-positioned to take advantage of the weaker peso to attempt to rebalance the economy away from a commodity exporter. As such, the negative impact of the weaker peso on inflation outlays it competitive, leaving us still bearish on country’s asset prices.” “USD/COP is likely to revisit the August all-time high near 3266 in the coming weeks. High inflation and more rate hikes are likely to keep Colombian local currency bonds in the underperforming camp too.” For more information, read our latest forex news.