Colombian Peso Advances on Bets Dollar Purchases Not Enough
Colombia’s peso rose to a five-month high on bets the central bank’s efforts to ease gains in the currency won’t be enough amid rising foreign direct investment and increased appetite for the nation’s financial assets.
The peso gained 0.2 percent to 1,779.30 per U.S. dollar, from 1,782.10 yesterday. Earlier it touched 1,774.90, the strongest intraday level since Sept. 1. The peso has jumped 9 percent this year.
In a bid to stem the peso’s advance, Colombia’s central bank said last week that starting Feb. 6 it will buy a minimum of $20 million a day for at least three months.
“Risk aversion has fallen and given all the liquidity in global markets and Colombia’s good fiscal figures, the central bank’s measures aren’t enough to counter the appreciation pressures,” said Andres Pardo, the head analyst at financial services holding company Corp. Financiera Colombiana, known as Corficolombiana.
Colombia is helping keep the peso competitive by avoiding bringing dollars into the country, including at least $1 billion in dividends from oil producer Ecopetrol SA, Finance Minister Juan Carlos Echeverry said today in a conference call with investors. The peso is rallying as foreign investment is being drawn into Colombia by booms in mining and oil, he said.
“What we have seen over the last month or month and a half worries me,” Echeverry said. “We can’t risk losing lots of jobs because of the currency.”
Budget Deficit
Colombia’s consolidated budget deficit, which includes states, municipalities and state-run companies, was 2.2 percent of gross domestic product last year, lower than the government’s December estimate of 2.9 percent, as economic growth boosts tax revenue, Echeverry said.
The yield on the government’s 10 percent peso bonds due July 2024 rose one basis point, or 0.01 percentage point, to 7.41 percent, according to the central bank. The bond’s price fell 0.122 centavo to 120.4860 centavos per peso.
The nation’s borrowing costs rose at an auction of fixed- rate securities today. The government sold peso bonds due August 2026 to yield 7.62 percent, the Finance Ministry said in a statement, up from 7.49 percent at the last auction on Jan. 25. Colombia also sold bonds due October 2018 to yield 6.89 percent, the same yield at the previous auction, while the yield on the October 2015 securities rose to 6.42 percent from 6.28 percent, according to the statement.
To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net
To contact the editors responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net
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