Colombian Peso Falls as Europe, China Manufacturing Contract

Colombia’s peso dropped as weaker- than-forecast manufacturing data in Europe and China outweighed Colombia’s higher-than-forecast growth in the fourth quarter.

The peso fell 0.1 percent to 1,760.45 per U.S. dollar in Bogota, after earlier falling as much as 0.3 percent, from 1,759.56 yesterday. It has gained 10 percent this year, the biggest advance among all currencies tracked by Bloomberg.

Gross domestic product in Colombia expanded 6.1 percent in the fourth quarter from a year earlier, beating the 5.8 percent median estimate of 31 economists in a Bloomberg survey. The deceleration from a revised 7.5 percent in the third quarter damped speculation that the central bank will raise the overnight lending rate tomorrow.

“The data corroborates that the Colombian economy is at a good point, but not much further than what was already priced in,” said Daniel Escobar, head analyst at Global Securities brokerage in Bogota. “We don’t expect this to lead to a different policy decision. The central bank will leave the rate unchanged for one or two more sessions,” he said.

Gross domestic product grew 5.9 percent in 2011, the biggest annual jump since it rose 6.9 percent in 2007. The acceleration in growth has led policy makers to raise interest rates nine times since the start of 2011, bucking a global trend for lower borrowing costs.

“We’re still watchful of what’s happening internationally,” Escobar said.

A gauge of European manufacturing fell as factory output unexpectedly shrank in Germany and France, according to London- based Markit Economics. A preliminary measure of Chinese manufacturing dropped to the lowest level in four months, based on figures from HSBC Holdings Plc and Markit Economics.

The yield on Colombia’s 10 percent peso-denominated debt due July 2024 was little changed at 7.33 percent, according to the central bank.

To contact the reporter on this story: Christine Jenkins in New York at cjenkins28@bloomberg.net

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