Colombian Peso Gains to Seven-Month High on Rising Inflows

Colombia’s peso rose to an almost seven-month high on speculation the central bank’s daily dollar purchases won’t be enough to ease the local currency’s rally amid rising foreign investment into the South American country.

The peso gained 0.3 percent to 1,767.35 per U.S. dollar, from 1,772.01 yesterday. Earlier it touched 1,762.07, the strongest intraday level since Aug. 2. The currency has advanced 10.3 percent in the past three months, the third-best performer after the South African rand and the Polish zloty among 25 emerging-market currencies tracked by Bloomberg.

Toronto-based ratings company DBRS’s announcement yesterday that it raised the outlook on Colombia’s foreign credit ratings to positive from stable is helping fuel gains in the peso, according to William Florez, an analyst at Helm Bank SA’s brokerage unit in Bogota. DBRS rates Colombia BBB(low), the lowest level of investment grade.

“There’s a lot of appetite for Colombian assets from investors abroad and news like that just helps it even more,” Florez said. “While Banco de la Republica’s dollar purchases are helping ease the appreciation accelerator, they don’t reverse the trend.”

Banco de la Republica said Feb. 24 it will extend a program of daily purchases of a minimum of $20 million in auctions begun Feb. 6 to at least Aug. 4, from the initially announced minimum three-month period. The announcement came after policy makers said they raised the overnight lending rate a quarter percentage point to 5.25 percent, as forecast by 22 of 36 economists surveyed by Bloomberg.

The yield on the government’s 10 percent peso bonds due July 2024 fell two basis points, or 0.02 percentage point, to 7.33 percent, according to the central bank. The price rose 0.199 centavo to 121.225 centavos per peso.

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