Colombian Peso Reaches 13-Month High on Outlook for Bond Inflows

Colombia’s peso rose to a 13-month high on speculation funds flowing into the Andean country’s local bond market will increase following a heavier weighting in global indexes.

The peso jumped 0.9 percent to 1,860.5 per U.S. dollar today in Bogota, its strongest level since May 2013. That’s the best performance today among 24 emerging-market currencies tracked by Bloomberg.

Colombia’s currency has gained 9.1 percent since March 18, the day before JPMorgan Chase & Co. said it would more than double the weighting of the country’s peso notes in two of its indexes. The increases began in May and won’t be finished until the end of September.

“People are speculating that the change in weighting carried out each month means increased flows in the first couple of days” following the move, Camilo Perez, the head analyst at Banco de Bogota, the country’s second-biggest bank, said in a phone interview.

The central bank bought today $31.9 million in the spot market, up from last month’s daily average of $19.7 million. Banco de la Republica said June 20 it will buy as much as $2 billion in the third quarter to build international reserves, double the second-quarter pace of up to $1 billion.

Colombia is weighing additional measures to weaken the peso, Finance Minister Mauricio Cardenas said in an interview today from Cartagena. The Treasury in May started buying dollars in the spot market, purchasing $148.5 million that month, according to the most recent figures on the Finance Ministry’s website.

“We’re not thinking about capital controls,” Cardenas said. “We’re thinking more in terms of a market-friendly approach, which involves purchases of foreign exchange both by the Treasury and the central bank.”

The price on Colombia’s benchmark peso bonds due 2024 rose 0.67 centavo to 125.42 centavos per peso, according to data from the central bank. The yield fell eight basis points, or 0.08 percentage point, to 6.48 percent.

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

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Dennis Fitzgerald

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