Aug. 24 (Bloomberg) -- Colombia’s peso weakened the most in more than a week amid speculation the central bank would increase dollar purchases to stem the local currency’s rally.
The peso fell 0.3 percent to 1,814.55 per U.S. dollar at the close of trading in Bogota, the biggest drop since Aug. 15. The peso advanced 0.3 percent for the week.
“Some traders could be betting on more central bank dollar purchases,” said Diana Guiza, an analyst at Bogota-based brokerage Corredores Asociados SA.
Colombia’s currency has fallen 1.2 percent this month after outgoing Finance Minister Juan Carlos Echeverry unveiled a dollar-buying program by the Treasury separate from the central bank’s. The peso is up 6.8 percent this year, still the best performance among the world’s currencies tracked by Bloomberg after the Hungarian forint and the Chilean peso.
The Treasury will continue to buy dollars next week to try to weaken the peso, Echeverry said in an interview after his resignation yesterday. The central bank “still has a very precise way of looking at intervention,” Echeverry said, “But we can change their minds, so we will keep trying.”
The Treasury will buy $200 million this week, on top of the $300 million it bought last week.
Policy makers lowered the overnight lending rate at today’s meeting by a quarter-percentage point to 4.75 percent. The decision came after the close of trading. Colombia’s central bank will buy $700 million between now and the end of September, in amounts of at least $20 million per day, bank chief Jose Dario Uribe said after the meeting.
Mauricio Cardenas, who was appointed finance minister yesterday, pledged to use “all necessary tools” to protect Colombia’s economy from a rally in the peso.
Policy makers lowered the overnight lending rate at today’s meeting by a quarter-percentage point to 4.75 percent.
The yield on Colombia’s 10 percent peso-denominated debt due in July 2024 dropped two basis points, or 0.02 percentage point, to 6.62 percent. The price increased 0.223 centavo to 127.205 centavos per peso.
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