Colombian Peso Advances to 10-Week High in Dollar Inflow Bets

Colombia’s peso rose to a 10-week high as companies repatriated profits from foreign markets before tax payments this month and on speculation the government is bringing in dollars it left overseas last year.

The peso advanced for a fourth day, climbing 0.3 percent to 1,844 per U.S. dollar at 11:59 a.m. New York time, from 1,849.19 on April 1. Earlier it touched 1,842.95, its strongest intraday level since Jan. 25.

In a bid to ease gains in the local currency, Finance Minister Juan Carlos Echeverry said in October that the government would keep $1.5 billion overseas “at least for the first months of 2011” instead of bringing the money into Colombia and converting it to pesos. Echeverry has said the government will bring the money in “slowly” in 2011.

“The government seems to be bringing in dollars and so are companies ahead of tax payments,” said Carlos Torres, head analyst at brokerage Asesores en Valores SA in Bogota.

Companies are slated to pay taxes between April 8 and April 25, he said.

An official at the Finance Ministry declined to comment on whether the government was bringing dollars into the country.

Colombia’s peso bonds rose, pushing yields to fall to a two-week low, as investors pared bets on quickening March inflation.

Agricultural Prices

The yield on the Colombian government’s benchmark 11 percent bonds due July 2020 fell 2 basis points, or 0.02 percentage point, to 8.15 percent, according to Colombia’s stock exchange. That’s its lowest level on a closing basis since March 18. The bond’s price rose 0.144 centavo to 118.011 centavos per peso.

Prices of fruits, vegetables and meat fell in March amid increased supply, the Agriculture Ministry said a report yesterday.

“People are less worried about food prices and that’s leading them to cut their inflation bets,” Torres said.

Annual inflation quickened to 3.37 percent last month, according to the medium estimate of 20 economists surveyed by Bloomberg. The national statistics agency is slated to release the March inflation report tomorrow. The central bank targets inflation between 2 percent and 4 percent this year.

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

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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