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Colombia's Peso Rises to a Two-Week High as U.S. Adds Private-Sector Jobs
Colombia’s peso rose to a two-week high as a better-than-expected U.S. jobs report boosted prices for commodities, and the country’s central bank forecast increased capital flows into the economy through early 2011.
The currency strengthened 0.3 percent to 1,808.7 per dollar at 2:47 p.m. New York time, from 1,813.18 yesterday, the strongest level since Aug. 17. Today’s gain brings this year’s surge to 13 percent, the best performance among all currencies tracked by Bloomberg.
Private payrolls in the U.S. that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a gain of 40,000.
“If the U.S. looks more positive, it’s a better outlook for the region,” Rupert Stebbings, managing director of Celfin Capital SA’s Colombia unit, said today in a telephone interview from Medellin. “If the market’s looking better in the U.S., and everything’s going the right way, then they’re going to buy more oil, they’re going to buy more of everything, and most of it is commodities that Colombia exports.”
The currency strengthened 0.5 percent this week.
The yield on the benchmark 11 percent bonds due 2020 rose one basis point, or 0.01 percentage point, to 7.07 percent, according to Colombia’s stock exchange. The bond’s price fell 0.121 centavo to 127.259 centavos per peso.
Capital Flows
Colombia’s central bank said today it foresees increased capital flows into the economy through early 2011, and expects inflation to remain within policy makers’ long-range targets, according to the minutes of its last monthly meeting.
“The board of directors believes the Colombian economy during the remainder of this year and in early 2011 will see favorable terms of trade, larger capital flows, low international interest rates and a weak recovery in external demand for the country’s non-traditional products,” the minutes posted on the bank’s website said.
Central bank chief Jose Dario Uribe told reporters after the Aug. 20 meeting that it will buy dollars in the spot market to ease gains in the peso when appropriate. The board maintained the interbank rate at 3 percent.
The central bank purchased $20 million a day between March 3 and June 30, or $1.6 billion in total, to curb a rally policy makers said left the peso “misaligned.”
“Authorities are increasingly wary of the unshakable COP appreciation pressures and signs of emerging currency misalignment,” Goldman Sachs Group Inc. economists Alberto Ramos and Paulo Leme said in an e-mailed report today. “Despite some central bank reluctance to lean against the wind of currency appreciation, we do not rule out direct or indirect intervention in the FX market in the near term to stabilize the currency.”
To contact the reporters on this story: Nathan Gill in Quito at ngill4@bloomberg.net; Helen Murphy in Bogota at hmurphy1@bloomberg.net
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