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Hedging peso risk and giving guarantees across the border in Colombia: FX derivatives with local banks and foreign counterparties, commodity and credit derivatives, and foreign currency guarantees

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Last verified: 2026-10-26 · Status: Stable

Residents may hedge with Colombian FX intermediaries or with authorized foreign counterparties: with local banks, derivatives are settled in pesos (or by exchanging pesos and currency on delivery), while with foreign counterparties settlement may be in pesos or currency as agreed, and derivatives are a compulsory FX market operation when paid in currency. Residents may buy credit derivatives from authorized foreign counterparties but may not issue them, and foreign investors may hedge locally on the same terms as local investors. Guarantees in foreign currency between residents, or to and from non residents, are allowed; calling a guarantee that creates a debt between a resident and a non resident triggers the foreign loan report, and derivatives that do not meet the exchange requirements are fined at 100 percent of the operation.

USD figures use the TRM (tasa representativa del mercado) of COP 3,158.43 per US dollar, valid 24 to 26 October 2026, from the official TRM series certified by the Superintendencia Financiera and published on the national open data portal. Amounts in UVT use the 2026 UVT of COP 52,374 (DIAN Resolución 000238 de 2025). Conversions are for orientation only.

Key facts

Payment currency for derivatives between residents and Colombian banks	Pesos (delivery settled FX contracts exchange pesos and currency) textResolución Externa 1 de 2018 art. 64, as of 2026-10-26 · in force
Derivatives with authorized foreign counterparties	Allowed; payment in pesos or currency as agreed textResolución Externa 1 de 2018 art. 63 and art. 64, as of 2026-10-26 · in force
Residents may issue credit derivatives	No (may buy from authorized foreign counterparties) textResolución Externa 1 de 2018 art. 65, as of 2026-10-26 · in force
Report to Banco de la República of guarantees granted by residents or non residents	Not required (loan report if a call creates a foreign loan) textDCIP-83 num. 6.1 and 6.2, as of 2026-10-26 · in force
Fine for derivatives not meeting the exchange requirements	100 % of operationDecreto Ley 2245 de 2011 art. 3 num. 27, as of 2026-10-26 · in force

The rule

1. Residents and FX intermediaries may enter into financial derivatives with authorized foreign counterparties, and intermediaries may enter into financial derivatives agreed in foreign currency with residents and other intermediaries. Financial derivatives are operations whose fair value depends on one or more underlyings and that settle later. Banco de la República sets the requirements for authorized foreign counterparties.Resolución Externa 1 de 2018 of the Board of Banco de la República, Art. 63 and art. 66, 2018-05-25 official text · verified 2026-10-26

2. Between residents (or intermediaries) and authorized foreign counterparties, derivatives may settle by delivery or in cash, and payments may be in pesos or currency as agreed, including premiums, margins and collateral. Between residents and Colombian intermediaries, or between intermediaries, settlement may be by delivery or in cash but payment is in pesos, except that delivery settled peso and currency or currency and currency contracts are paid by exchanging the respective amounts; premiums, margins and collateral are paid in pesos. Payments in pesos need not go through the FX market. Derivatives that involve acquiring a financial asset must also follow the portfolio investment or investment abroad rules.Resolución Externa 1 de 2018, art. 64 (parágrafo 1 as amended by Resolución Externa 4 de 2021), Art. 64, incisos 1 to 3 and parágrafos 1 to 3, 2018-05-25 official text · verified 2026-10-26

3. Residents and intermediaries may enter into commodity derivatives with authorized foreign counterparties, settled by delivery or in cash and paid in pesos or currency as agreed; commodity derivatives between residents and Colombian intermediaries settle in cash and in pesos.Resolución Externa 1 de 2018 of the Board of Banco de la República, Art. 61 and art. 62, 2018-05-25 official text · verified 2026-10-26

4. Residents, including entities supervised by the Superintendencia Financiera, may enter into credit derivatives with authorized foreign counterparties but may not issue them. Only contracts issued by foreign issuers on foreign or local assets may be traded; novation is allowed if one party is an authorized foreign counterparty; early termination, netting and payment in pesos or currency may be agreed.Resolución Externa 1 de 2018, art. 65 as amended by Resolución Externa 10 de 2022, Art. 65, 2018-05-25 official text · verified 2026-10-26

5. Foreign investors may carry out money market operations, financial derivatives and the related guarantees, including those required by a central counterparty clearing house supervised by the Superintendencia Financiera, on the same terms and through the same channels and intermediaries as local investors, and may keep the funds needed in current or savings accounts. Colombian intermediaries may also trade peso denominated derivatives with authorized foreign counterparties.Decreto 1068 de 2015 as replaced by Decreto 119 de 2017; Resolución Externa 1 de 2018, Decreto 1068 art. 2.17.2.2.1.4; Res. Ext. 1 de 2018 art. 8 par. 7, 2015-05-26 official text · verified 2026-10-26

6. Residents may give other residents and intermediaries guarantees in foreign currency for any obligation, and give non residents guarantees in currency or pesos; non residents may guarantee residents' obligations in currency or pesos. Calls and reimbursements may be in pesos or currency as agreed and must be reported and channelled as Banco de la República requires; guarantees in foreign currency backing obligations between residents are called and reimbursed in pesos, save when the underlying obligation may lawfully be paid in currency or is settled through compensation accounts.Resolución Externa 1 de 2018 of the Board of Banco de la República, Art. 52 and art. 53, 2018-05-25 official text · verified 2026-10-26

7. Guarantees granted by residents and non residents need no report to Banco de la República; guarantees granted by FX intermediaries are reported by the intermediary. When a call creates a debt between guarantor and guaranteed party that is a foreign loan, the resident files the loan report (purpose 45 for a debt of the resident, 47 for a claim on a non resident). Calls between a foreign company and its own branch may not create a loan between them.Circular Reglamentaria Externa DCIP-83 de 2023 (compiled), Num. 6, 6.1, 6.2, 6.3 and 6.5, 2023-09-12 official text · verified 2026-10-26

8. Derivative operations are also subject to Banco de la República's Circular Reglamentaria Externa DOAM-144, which DCIP-83 refers to for derivatives. DIAN fines derivatives carried out without meeting the exchange requirements at 100 percent of the operation.Circular Reglamentaria Externa DCIP-83 de 2023; Decreto Ley 2245 de 2011, DCIP-83 num. 10.5; Decreto Ley 2245 de 2011 art. 3 num. 27, 2011-06-28 official text · verified 2026-10-26

Counterparty	Settlement	Payment currency	FX market
Colombian bank (FX intermediary), cash settled forward	Cash	Pesos	Not needed for peso payments
Colombian bank, delivery settled peso and dollar forward	Delivery	Exchange of pesos and dollars	The currency leg is an FX operation with the bank
Authorized foreign counterparty	Cash or delivery	Pesos or currency as agreed	Currency payments are channelled
Credit derivative with authorized foreign counterparty	Cash or delivery	Pesos or currency as agreed	Currency payments are channelled

Who you hedge with decides how you pay (Resolución Externa 1 de 2018 art. 61 to 65)

Worked example

An importer owes US$1,000,000 in 90 days (about COP 3,158,430,000 at today's TRM). It buys a cash settled dollar forward from its Colombian bank: at maturity the difference between the forward rate and the reference rate is paid in pesos, with no FX declaration (Res. Ext. 1 de 2018 art. 64 par. 3), and it then buys the dollars for the import through the FX market.
Its US parent instead offers to hedge it from New York. The parent must qualify as an authorized foreign counterparty; settlement may then be in dollars through the FX market or in pesos, as agreed (art. 63 and 64).
A Colombian bank issues a standby letter of credit in dollars for the importer's US supplier. If the supplier calls it and the bank pays, the importer owes its bank a foreign currency debt; a foreign currency credit from a Colombian FX intermediary to a resident is a foreign loan, reported with purpose 45 (Res. Ext. 1 de 2018 art. 44; DCIP-83 num. 6.2 lit. a).

Step by step

1. Identify the exposure and choose a local bank or an authorized foreign counterparty.
2. Sign the framework agreement; check whether the contract is cash or delivery settled and the payment currency allowed.
3. For currency payments with foreign counterparties, channel them through a bank or compensation account.
4. For guarantees, check whether a call would create a foreign loan and be ready to file the loan report.

Common traps

Hedging with a foreign affiliate that is not an authorized foreign counterparty. Derivatives outside the requirements are fined at 100 percent of the operation (Decreto Ley 2245 art. 3 num. 27).
Paying margin to a local bank in dollars. Premiums, margins and collateral with Colombian intermediaries are paid in pesos (Res. Ext. 1 de 2018 art. 64).
Issuing credit protection from Colombia. Residents may buy but not issue credit derivatives (art. 65).

Sources

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