Colombian Peso Falls on Speculation for Increased Dollar Demand

Colombia’s peso fell for a fifth day, its longest losing streak in two months, on speculation demand for dollars will increase ahead of Cemex SAB’s initial public offering in the Andean country.

The peso dropped 0.1 percent to 1,817.95 per U.S. dollar, parings its gain this year to 6.6 percent. The currency fell for nine straight days in the period ended Aug. 20.

“We still don’t have much information on how much demand for dollars we could be seeing with the Cemex deal, but it’s definitely something that the market has started to price in,” said Diana Guiza, an analyst at Corredores Asociados brokerage in Bogota.

Cemex, the largest cement maker in the Americas, is preparing for an IPO of its Central and South America unit in Colombia. The Monterrey, Mexico-based company said in an Oct. 19 filing that it has taken currency hedges to protect against declines in the Colombian peso as it plans to use proceeds of the offering to pay debt in dollars.

Colombia’s peso bonds, known as TES, have been fluctuating ahead of tomorrow’s policy meeting. The yield on the country’s 10 percent peso-denominated debt due in 2024 closed little changed at 6.07 percent, according to the central bank.

Twenty-eight economists surveyed by Bloomberg predict the overnight lending rate will remain unchanged after tomorrow’s meeting while seven expect a reduction to 4.5 percent.

“Some are still expecting a rate cut tomorrow,” said Jorge Cardozo, an analyst at Corredores Asociados. “Bonds have been fluctuating, especially after the rally in the long-end of the curve.”

Rate decisions will depend on global growth and the domestic economy, Colombia’s central bank said in minutes of its Sept. 28 meeting that were published Oct. 12. Policy makers held the target lending rate at 4.75 percent after two cuts since June from 5.25 percent.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

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

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