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Colombia Peso Declines on Intervention Outlook; Bond Yields Fall

Colombia’s peso fell to a one-week low on speculation the government will announce measures next week that will lead to further declines in the currency.

The peso depreciated 0.2 percent to 1,822.35 per U.S. dollar at 9:39 a.m. in Bogota, the weakest level on a closing basis since April 4. The currency, which strengthened 9.7 percent in 2012, has dropped 3.1 percent this year.

President Juan Manuel Santos will present a stimulus plan on April 15 that includes additional measures to stem gains in the peso, Finance Minister Mauricio Cardenas said last week. While he has said that he expects the peso to weaken to 1,900 and wants to “get there quickly,” he has ruled out capital controls because he said they aren’t effective.

“Investors are positioning themselves for what may come out on Monday,” said Diana Guiza, an analyst at Bogota-based brokerage Corredores Asociados. “Given that the usual tools have already been used and since capital controls have been ruled out, whatever it is will be pretty novel.”

The central bank said Jan. 28 it will buy at least $30 million a day, bringing purchases in the foreign-exchange market to $3 billion from February to May. Cardenas has also said that Colombia will buy $1 billion of U.S. currency to pay for interest and principal on foreign bonds coming due this year in addition to the $1 billion it will purchase for its oil- stability fund.

Yields on Colombia’s peso bonds maturing in 2024 fell three basis point, or 0.03 percentage point, to 4.96 percent, according to the central bank. The price rose 0.262 centavo to 142.773 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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