Colombia’s peso rose to the strongest in almost six months after Greece reached a deal on austerity measures needed to help avoid default, boosting demand for higher-yielding emerging-market assets.
The peso is also gaining as companies exchange dollars for the local currency to pay taxes this month, said Omar Escorcia, an analyst at Asesores en Valores SA brokerage in Bogota.
The peso gained 0.3 percent to 1,774.38 per U.S. dollar at 9:31 a.m. in Bogota, from 1,779.30 yesterday. Earlier it touched 1,770, the strongest intraday level since Aug. 17. The peso has jumped 9.3 percent this year.
“The market is in a positive mood today, and added to that important flows are coming in for taxes,” Escorcia said.
Greek Prime Minister Lucas Papademos called European Central Bank President Mario Draghi to tell him “an agreement has been reached,” Draghi said at a press conference today in Frankfurt.
Rising foreign investment into oil and mining and a widening interest rate differential will offset the central bank’s efforts to ease gains in the local currency, according to Escorcia. Colombia’s benchmark interest rate is 5 percent, compared with near zero in the U.S.
In a bid to stem the peso’s advance, Colombia’s central bank said last week that starting Feb. 6 it will buy a minimum of $20 million a day for at least three months.
Finance Minister Juan Carlos Echeverry said in a conference call with investors yesterday the peso’s rally this year “worries” him as it risks jobs.
The yield on the government’s 10 percent peso bonds due July 2024 rose two basis points, or 0.02 percentage point, to 7.44 percent, according to the central bank. The bond’s price fell 0.202 centavo to 120.284 centavos per peso.