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Colombia Peso Declines as U.S. Retail Sales Trail Estimates

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Feb. 14 (Bloomberg) -- Colombia’s peso fell the most this year after a report showing U.S. retail sales rose less than forecast cut into the appetite for higher-yielding, emerging-market assets.

The peso dropped 0.7 percent to 1,790.20 per U.S. dollar, from 1,778.20 yesterday. Today’s decline pared the peso’s gain in the past three months to 6.9 percent, still the best performance among 25 emerging-market currencies tracked by Bloomberg.

“The U.S. retail sales numbers are leading to some profit taking after the rally we saw” in the peso, said Jorge Cardozo, an analyst at Bogota-based brokerage Corredores Asociados SA.

Sales at U.S. retailers rose 0.4 percent in January, half the median forecast of economists surveyed by Bloomberg. Reduced risk appetite has helped ease gains in the local currency after Colombian policy makers said Feb. 3 they would buy at least $20 million a day in the foreign exchange market.

The government also announced last month it won’t bring any dollars into the country for financing in 2012, and will keep $1.2 billion of royalty funds and at least $1 billion of dividends offshore from state oil company Ecopetrol SA in a bid to stem gains in the local currency.

Colombia may take further action to curb the peso’s appreciation as it fights its “own little currency war” to protect export industries, Finance Minister Juan Carlos Echeverry said in a Feb. 9 interview.

The peso will probably strengthen to as high as 1,730 per dollar between April and June as companies buy the local currency to pay taxes in those months, according to Cardozo.

“Those are the months we see the biggest appreciation pressures,” Cardozo said. The central bank’s dollar purchases may help ease some of those gains, he said.

The yield on the government’s 10 percent peso bonds due July 2024 fell three basis points, or 0.03 percentage point, to 7.36 percent, according to the central bank. The price rose 0.269 centavo to 120.9520 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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