(Bloomberg) -- As the Colombian peso crashed in the weeks before he took office last year, President-elect Gustavo Petro warned people they would lose money if they bet against his government.    

He was right, at least so far. 

The peso has soared 22% this year, the most among more than 140 currencies tracked by Bloomberg.

For Petro, though, the rally is happening for all the wrong reasons. 

The currency has been buoyed by higher prices for Colombia’s oil exports, which Petro wants to phase out, and one of the world’s highest interest rates, which he is pressuring the central bank to cut. 

It’s part of a broader rally for Colombian assets that has coincided with weakening of Petro, who spooked investors after he was elected last year. The country’s first leftist president came into office promising to deliver a set of bold reforms to the nation’s tax, health care, labor and pension systems. 

At one point, he predicted on Twitter that Colombians who were buying US dollars to hedge against the peso would lose out in the long run. “Watch out!” he wrote, “Don’t lose your money.”

As his popularity slipped and his reforms stalled, the peso and government bonds posted gains. 

Felipe Pianetti, a portfolio manager on Lazard Asset Management’s Emerging Markets Debt team in New York, traces a direct, inverse relationship between Petro’s approval rating and the peso’s strength. 

The less popular he becomes, the harder it is for him to pass his reforms. 

“If I were to think in terms of what’s priced in to the peso right now, the market is expecting very low odds of Petro’s agenda moving forward in any way,” he said. 

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That leaves the currency vulnerable if Petro is able to get some legislation passed, Pianetti said. “If the market is wrong on that, it will definitely be a tail event.”

One poll published by W Radio this month showed Petro’s approval rating at 32%, down from 48% last October. A Petro spokesperson didn’t reply to a request for comment. 

Costly Plans 

For now, the collapse of the ruling coalition in congress makes it harder for the government to implement its costly plans to overhaul the nation’s health and pension systems. 

What’s more, the yields in a country with a 13.25% benchmark interest rate — the highest in Latin America — “offer protection” for investors, said Claire Dissaux, a sovereign EM credit analyst at AXA Investment Managers based in Paris.

“Here you have a market that overestimated the impact of Petro,” she said. 

--With assistance from Robert Jameson.

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