Shares of the Global X FTSE Colombia 20 ETF (GXG), the largest ETF devoted to the South American country, are off by about half a percent Monday on light volume as traders await news of a possible interest rate cut from Colombia's central bank.

Due to the peso's rise against the U.S. dollar, most economists are expecting a third consecutive rate cut when Colombia's central bank concludes its meeting later Monday.

As a major exporter of gold, oil and other raw materials, Colombia is sensitive to the peso's fluctuations. That is especially true against the dollar because Colombia is major supplier of crude to the U.S. In October 2012, the Andean nation was the seventh-largest exporter of oil to the U.S., according to the Energy Information Administration.

Regarding GXG, energy is the ETF's third-largest sector with an allocation of nearly 17 percent. Ecopetrol (EC), Colombia's state-controlled oil giant, is the ETF's largest individual holding with a weight of 14.25 percent.

With inflation running below the central bank's comfort zone of three percent and Colombian President Juan Manuel Santos prodding the bank to lower rates again, those familiar with Colombian economics and equities appear comfortable betting on a rate cut. Third-quarter GDP growth of just 2.1 percent buoys the case for Banrep to lower rates.

However, lower rates are not a forgone conclusion. Last week, Merrill Lynch cited an uptick credit growth and expected fourth-quarter GDP of 4.2 to 4.6 percent as among the reasons Banrep can leave rates on hold, Barron's reported.

Colombia's benchmark interest rate is currently 4.25 percent.

Year-to-date, GXG was up just 0.85 percent at the start of trading Monday, a middling performance compared to some emerging markets ETFs. Still, GXG has seen modest inflows. The ETF had less than $180 million in assets under management in early November. That number is now approaching $187 million.

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