Colombian Peso Holds at One-Week High on Bernanke Testimony
Colombia’s peso held at a one-week high after Federal Reserve Chairman Ben S. Bernanke said the central bank is ready to take further action to boost growth in the world’s biggest economy without outlining specific measures.
The peso rose as much as 0.3 percent after U.S. data today that showed industrial production increased in June, signaling manufacturing is boosting economic growth in the U.S., Colombia’s biggest trading partner. The U.S. buys about 40 percent of Colombia’s exports.
“The U.S. output data is sending a positive signal to the market, especially in those countries that have strong trade ties,”said Julian Marquez, an analyst at Interbolsa SA brokerage in Bogota. While investors expecting Bernanke to announce more stimulus measures were disappointed, “current conditions still lead to a lot of liquidity which translates into flows into countries like Colombia,” Marquez said.
The Colombian currency closed little changed at 1,780.28 per dollar. It earlier gained to 1,774.28, its strongest level since July 5. The peso has jumped 8.9 percent this year, the best performance among all currencies tracked by Bloomberg.
While Bernanke told lawmakers today that progress in reducing unemployment is likely to be “frustratingly slow,” he outlined possible options for adding further monetary stimulus. In response to questions, Bernanke said possible measures include further purchases of assets, such as mortgage-backed securities, reducing the interest rate that the Fed pays on reserves that banks keep with the Fed, and altering its communications on the outlook for interest rates.
The yield on Colombia’s 10 percent peso-denominated debt due in July 2024 rose three basis points, or 0.03 percentage point, to 6.83 percent, according to the central bank. The bond’s price fell 0.314 centavo to 125.4460 centavos per peso.
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