Colombia’s peso advanced as oil, the nation’s biggest export, rose on speculation central banks this week will take steps to support the global economic recovery.
The peso strengthened 0.2 percent to 1,788.25 per U.S. dollar at 9:57 a.m. in Bogota. It has gained 8.4 percent this year, the best performance among all currencies tracked by Bloomberg.
“Oil is gaining and that helps the peso,” said Camilo Perez, the head analyst at Banco de Bogota, the nation’s second- biggest bank.
Crude for September delivery advanced 0.8 percent on the New York Mercantile Exchange before a Federal Reserve policy meeting ends today. The European Central Bank’s Governing Council gathers tomorrow. Oil accounted for 49 percent of Colombia’s sales abroad last year.
Speculation that Colombia’s central bank will increase its daily dollar purchases to stem the peso’s rally is helping ease gains in the local currency, according to Perez.
While central bank chief Jose Dario Uribe reiterated on July 27 that the bank will buy a minimum of $20 million daily in the spot market until at least Nov. 2, Finance Minister Juan Carlos Echeverry said that day that several board members wanted increased dollar purchases.
“The risk of greater intervention remains,” said Perez. He forecasts policy makers will wait until the Aug. 24 monetary policy meeting to announce an increase to $40 million daily.
The yield on Colombia’s 10 percent peso-denominated debt due in July 2024 fell two basis points, or 0.02 percentage point, to 6.64 percent, according to the central bank.
The yield has fallen 13 basis points since Banco de la Republica unexpectedly cut interest rates a quarter percentage point to 5 percent on July 27. The move surprised 24 of 35 economists surveyed by Bloomberg, who had predicted no change.
To contact the reporter on this story: Andrea Jaramillo in Bogota at email@example.com