Colombia’s peso advanced from a 15-month low following gains in crude oil, the South American nation’s biggest export.
The peso appreciated 0.4 percent to 1,841.40 per dollar at the close in Bogota, erasing an earlier drop. It plunged yesterday to 1,849.04, the weakest level since January 2012.
“Oil is gaining,” Lucia Duarte, a foreign-exchange strategist at Bancolombia SA, the nation’s biggest bank, said in a phone interview from Bogota. “After breaking a significant resistance level yesterday, the exchange rate is facing a new level at 1,853. That provides room for corrections.” Resistance refers to a level where dollar sell orders are clustered.
Crude oil, which accounts for about 40 percent of Colombia’s sales abroad, rose from a four-month low on signs that recent declines in the commodity were hard to sustain.
The peso, which strengthened 9.7 percent in 2012, has slumped 4 percent this year.
Speculation that the central bank will extend its plan to buy dollars will limit gains in the peso, according to Duarte. Banco de la Republica said Jan. 28 it will purchase at least $30 million a day, bringing purchases in the foreign-exchange market to $3 billion from February to May.
Policy makers will probably announce an extension to the dollar-purchase program at their April 26 monetary policy meeting, Duarte predicted.
“Next week’s Banrep meeting has the market nervous,” Duarte said. “Given the global environment, lower foreign direct investment and the government’s verbal intervention,” the trend is for a weaker peso, she said.
Finance Minister Mauricio Cardenas has said he expects the currency to weaken to 1,900 and wants to “get there quickly.”
Colombia announced on April 15 as part of an economic stimulus that it will adjust rules on risk and profitability governing pension funds to weaken the peso by encouraging them to invest more abroad. It also said a royalties fund controlled by the government known as Fonpet will buy $500 million this year to invest in assets abroad and keep another $500 million overseas rather than bringing the money back into Colombia.
Yields on Colombia’s peso bonds maturing in 2024 fell three basis points, or 0.03 percentage point, to 4.91 percent, according to the stock exchange.