March 29 (Bloomberg) -- Colombia’s peso dropped to a six-week low amid declines in oil, the nation’s biggest export, and on speculation policy makers may take additional measures to ease gains in the currency.
The peso weakened 1 percent to 1,792 per U.S. dollar in Bogota, the largest decline this year. It earlier touched 1,799.10, the weakest level since Feb. 16. The loss curbed this year’s increase to 8.2 percent as the currency heads to its third consecutive quarterly advance.
Oil fell to a six-week low as France said governments are moving closer to an agreement on releasing emergency stockpiles. Investors are speculating Colombian policy makers may take more measures to ease the peso’s rally after Finance Minister Juan Carlos Echeverry said he supports more intervention. The central bank should consider boosting dollar purchases and study possible “surprise” moves along with its announced plans, Echeverry told reporters yesterday in Bogota.
“The market is much more nervous and investors are more watchful of what could happen,” said Camilo Perez, the head economist at Banco de Bogota, the nation’s second-biggest bank. “A lot of investors were short the dollar, and with the peso’s reversal they’re going out to buy dollars to close the position, and that leads to much larger movements.”
In so-called short-covering, investors purchase securities to close out bearish bets.
The yield on Colombia’s 10 percent peso-denominated bonds due in 2024 rose two basis points, or 0.02 percentage point, to 7.26 percent in Bogota, according to the central bank.
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