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Peso Falls on Speculation Colombia Measures to Curb Rally

Feb. 21 (Bloomberg) -- Colombia’s peso fell on speculation the government may announce new measures to curb a rally that has made the currency among the best performers in emerging markets.

The peso weakened 0.2 percent to 1,778.35 per U.S. dollar at the close of trading in Bogota. It touched 1,770 on Feb. 9, its strongest intraday level since August. The peso has jumped 7.9 percent in the past three months, the second-most among 25 emerging-market currencies tracked by Bloomberg, after the Mexican peso.

“What we have now is some uncertainty over whether the government will take more measures to control the peso,” said Camilo Perez, analyst at Banco de Bogota.

The central bank began on Feb. 6 to buy a minimum of $20 million daily in the currency market, which is scheduled to continue for at least three months. The bank’s co-director Juan Jose Echavarria told reporters Feb. 15 that the bank would like to see a weaker peso.

The bank’s dollar purchases have yet to weaken the peso as foreign direct investment flows continue to grow, Perez said.

Foreign direct investment into Colombia may rise to $16 billion this year, from a record $14.5 billion last year, Trade Minister Sergio Diaz said Feb. 9 in Bogota. Foreign direct investment in January reached $1.6 billion, the second-biggest monthly flow in at least 12 years, according to statistics on the central bank’s website.

Colombia’s exports rose 43 percent to $5.5 billion in December from the same month a year before, the national statistics agency reported on its Web site Feb. 16.

The yield on the nation’s 10 percent bonds due in July 2024 increased three basis points, or 0.03 percentage point, to 7.41 percent, according to the stock exchange. The bond’s price fell 0.312 centavo to 120.506 centavos per peso.

To contact the reporter on this story: Blake Schmidt in Bogota at bschmidt16@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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