Colombia’s peso posted its first weekly gain since early January on speculation that the central bank’s plan to boost dollar purchases won’t curb the local currency’s appreciation.
The peso climbed 0.2 percent this week to 1,776.18 per dollar. It declined less than 0.1 percent at the close of trading today in Bogota. It is down 0.5 percent this year after rallying 9.7 percent in 2012, the most among major Latin American currencies.
The central bank said on Jan. 28 that it will buy at least $30 million daily in the foreign exchange market from February through May, for a total of at least $3 billion during the period. The program would boost average purchases from $500 million per month to no less than $750 million per month, according to the monetary authority’s statement.
“The currency measures weren’t as aggressive as some may have been expecting,” Alejandro Reyes, the head analyst at Ultrabursatiles SA brokerage, said in a phone interview today from Bogota. “The comments from policy makers this week recognized that they can’t change the peso’s trend.”
Central bank co-director Juan Jose Echavarria said Jan. 30 that policy makers can’t control the peso’s level over the long term. “Colombia has a complicated currency problem and that’s not up to the central bank to fix,” he said at an event in Bogota.
Yields on the government’s 10 percent peso-denominated debt due in 2024 fell four basis points, or 0.04 percentage point, to 5.20 percent, according to the central bank. The price rose 0.408 centavo to 140.624 centavos per peso.
Colombia could cut its benchmark interest rate 50 basis points to 3.5 percent in the first half of 2013 after a slowdown in growth left the economy operating below capacity, Nomura Securities International Inc. said in a research report published today.
To contact the editor responsible for this story: David Papadopoulos at email@example.com