Jan. 11 (Bloomberg) -- Colombia’s peso posted a weekly rally on speculation increased foreign investment will make the currency more attractive.
The peso was little changed at 1,763.58 per U.S. dollar at the close in Bogota and climbed 0.4 percent since Jan. 4. Colombia’s peso rallied 9.7 percent last year, the most after the Polish zloty and Hungarian forint among 171 counterparts tracked by Bloomberg.
“Colombia’s fundamentals point to a stronger peso,” Eduardo Bolanos, an analyst at Asesores en Valores brokerage in Bogota, said in a phone interview. “Foreign direct and portfolio investment are coming into Colombia and they will continue to come in.”
The government cut taxes on overseas investors’ earnings from domestic securities to 14 percent from 33 percent as of Jan. 1 to help increase demand and lower borrowing costs.
Agriculture Minister Juan Camilo Restrepo urged the central bank on Jan. 9 to boost dollar purchases to ease gains in the local currency, which are making coffee, flower and banana exporters less competitive.
The peso touched 1,750.50 on Jan. 2, the strongest intraday level since July 2011. Central bank Governor Jose Dario Uribe said that day on RCN Radio that the exchange rate is a concern and reiterated that Banco de la Republica will buy a minimum $20 million a day through at least the first quarter. The central bank printed pesos to purchase a record $4.4 billion last year.
The peso will probably rally to 1,750 this month, which may prompt policy makers to increase U.S. dollar purchases, according to Bolanos.
The yield on 10 percent peso-denominated debt due in July 2024 fell three basis points, or 0.03 percentage point, to 5.44 percent today, according to the central bank. The price rose 0.297 centavo to 138.250 centavos per peso.
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