(Bloomberg) -- Foreign investors are cutting their exposure to Colombia’s bond market as the peso stages the world’s biggest currency rally. 

Led by Norway’s sovereign wealth fund, foreigners last month sold 1.4 trillion pesos ($369 million) of the peso-denominated government bonds known as TES. Other big sellers included funds managed by Wellington Management Group LLP, Saudi Central Bank, the UK’s pension fund Universities Superannuation Scheme, and Citigroup Inc., according to data from the Comptroller General’s office. 

Local pension funds are doing the opposite. Over the same period, they added 1.2 trillion pesos to their TES holdings in purchases aimed at taking advantage of high yields, according to Sergio Olarte an economist at Scotiabank Colpatria. 

Colombia’s benchmark interest rate of 13.25% is the highest in the region. That gap is widening since peers such as Brazil, Peru and Chile have started to ease monetary policy months before Colombia is forecast to follow suit. 

The peso has rallied 24% this year, the most among more than 140 currencies tracked by Bloomberg. The currency has been supported by higher prices for oil, the nation’s biggest export, and relief as President Gustavo Petro failed to get costly welfare reforms through congress.  

Foreign investors have sold a net of 6.45 trillion pesos ($1.65 billion) of Colombian local bonds this year through August, while private pension funds have bought 23 trillion pesos of the securities over the same period.

The debt has returned around 20%, one of the best performances in emerging markets after Brazil in an index of local-currency bonds. 

©2023 Bloomberg L.P.