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Colombian Peso Declines as Interbolsa Sparks Refuge Demand

Colombia’s peso fell to a one-week low as investors bought dollars as a refuge from turmoil after the collapse of the Andean nation’s biggest brokerage.

The peso dropped 0.1 percent to 1,817.40 per U.S. dollar. Earlier it touched 1,823.15, the weakest level since Nov. 6. It has advanced 5.2 percent in the past year, the best performance among 25 emerging-market currencies tracked by Bloomberg.

Finance Minister Mauricio Cardenas said Nov. 7 that regulators will liquidate Interbolsa SA’s brokerage after it failed to meet a loan payment. Following the collapse, Colombia’s central bank began offering 300 billion pesos ($165 million) of 14-day repurchase agreements to boost liquidity, accepting securities including corporate bonds as collateral.

“People are still nervous after what happened with Interbolsa so we’re still seeing low trading volume and some seeking refuge in the dollar,” said Cesar Corredor, an analyst at Banco de Bogota SA, the nation’s second-biggest bank. “The measures taken by the government have helped calm fears.”

The benchmark Colcap stock index has dropped 3.7 percent this month, after Interbolsa said Nov. 1 it was facing a funding squeeze.

Today investors took 1.86 billion pesos of the 14-day repos offered by the central bank. There were no trades of the country’s benchmark peso bonds due July 2024 on the central bank’s platform known as SEN.

The yield on the government’s 11.25 percent peso- denominated debt due in October 2018 rose five basis points, or 0.05 percentage point, to 5.64 percent, according to the central bank. The price fell 0.337 centavo to 127.669 centavos per peso.

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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