Colombian Peso Declines Amid Bets for More Currency Measures
Colombia’s peso fell the most in two weeks on speculation policy makers will move to ease gains in the currency after Finance Minister Juan Carlos Echeverry said the country should take “more aggressive” action.
The peso slid 0.4 percent to 1,791.80 per U.S. dollar for the biggest decline since May 30. The peso has jumped 8.2 percent against the dollar this year, the best performance among all of the 170 currencies tracked by Bloomberg. That compares to a 9.3 percent drop in the Brazilian real.
“Investors are being cautious,” said Diana Aranguren, an analyst at Helm Bank SA (PFBHELMB) in Bogota. “Echeverry’s words sparked speculation of further currency measures so the next central bank meeting will be pretty decisive.”
Colombia has been less successful than other countries in the region at curbing currency gains, Echeverry told lawmakers on June 12. Experience shows that more central bank intervention in currency markets is compatible with low and stable inflation, he said.
Central bank chief Jose Dario Uribe said in an interview yesterday that Colombia wants a more devalued exchange rate and that policy makers won’t rule out bigger dollar interventions. The bank’s next monetary policy meeting is scheduled for June 29.
Banco de la Republica has said it will buy a minimum of $20 million daily in the spot market until at least Nov. 2, while the government is keeping abroad dividends from state-run oil company Ecopetrol SA (ECOPETL) to avoid strengthening the peso.
The yield on Colombia’s 10 percent peso-denominated debt due in July 2024 rose three basis points, or 0.03 percentage point, to 7.10 percent, according to the central bank. The bond’s price fell 0.298 centavo to 123.038 centavos per peso.
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