June 3 (Bloomberg) -- Colombia’s peso fell the most in more than a month as oil prices dropped and a decline in global stocks cut demand for higher-yielding, emerging-market assets.

“The peso is following the drop in external markets,” said Mario Nigrinis, an economist at BBVA Colombia. “Risk perception has improved in the past weeks but when you look at the gains in some of the currencies in the region, including the Colombian peso, you can see there was an overreaction.”

The peso fell the most since April 27, weakening 1.1 percent to 2,086.40 per dollar. Today’s decline pares the currency’s gain to 6.1 percent in the past week and 9.9 percent in the last month.

Gains in the peso since the end of March have pushed the currency into “fair value,” Goldman Sachs Group Inc. senior economist Alberto Ramos wrote in a report today. Further strengthening in the peso may trigger central bank intervention, according to Ramos.

“If the Colombian peso continues to show a steady appreciation trend the central bank could decide to go back to unsterilized spot market intervention to accumulate reserves,” he wrote.

The central bank today sold $180 million of dollar put options for the third time this year in a bid to ease fluctuations in the peso. The options are sold when the peso’s 20-day moving average changes by more than 5 percent. A put grants the right to sell.

Colombia’s Peso Bonds

The yield on the country’s 11 percent bonds due in July 2020 fell 21 basis points, or 0.21 percentage point, to 9.04 percent. The price advanced 1.52 centavos to 113.392 centavos per peso, according to Colombia’s stock exchange.

Speculation inflation will continue to slow is helping gains in peso bonds, according to Nigrinis.

Annual inflation slowed to 5.1 percent in May from 5.7 percent a month earlier, according to the median forecast of 14 economists in a Bloomberg survey. The national statistics agency is slated to release its monthly inflation report June 5.

Crude oil for July delivery fell 3.5 percent to $66.12 a barrel today after a government report showed that U.S. supplies unexpectedly increased as fuel consumption plunged to a 10-year low. Oil is Colombia’s biggest export.

The Chilean peso declined 0.6 percent to 566.75 per dollar, from 563.25 yesterday.

The yield for a basket of the country’s 10-year peso bonds in inflation-linked currency units, called unidades de fomento, fell four basis points to 3.2 percent, according to Bloomberg composite prices.

Argentine Bonds

In Argentina, the peso was little changed at 3.7435 per dollar, compared with 3.7430 yesterday.

The price of Argentina’s floating-rate dollar bonds due in 2012, known as Bodens, slid 0.9 cents on the dollar to 33.5 cents, according to JPMorgan Chase & Co. The price earlier touched 37.7 cents, the highest since Sept. 29.

Peru’s sol slid 0.4 percent to 2.9772 per dollar from 2.9667 yesterday. The yield on the nation’s 8.6 percent sol- denominated bond due August 2017 fell one basis point to 5.58 percent, according to Citigroup Inc.

Venezuela’s bolivar dropped 0.2 percent to 6.66 per dollar in the unregulated market from 6.65 yesterday, traders said. The government pegs the currency at an official exchange rate of 2.15 per dollar under restrictions it imposed in 2003.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

Last Updated: June 3, 2009 17:20 EDT