Colombia’s peso rose the most in a week on speculation overseas investors will increase demand for the country’s financial assets after Standard & Poor’s upgraded its foreign debt rating.
The peso appreciated 0.3 percent to 1,831.10 per U.S. dollar at the close of trading in Bogota, the biggest increase since April 18.
S&P raised Colombia by one level to BBB, the second-lowest investment-grade rating and in line with Brazil, Mexico and Peru. Finance Minister Mauricio Cardenas told reporters yesterday that Colombia will react if the S&P upgrade boosts dollar inflows and leads to a stronger peso.
“The move should lead to more demand from abroad, especially for the peso bonds,” Jhon Jairo Ramirez, an analyst at brokerage Bolsa y Renta SA, said in a telephone interview from Medellin.
The peso has plunged 3.5 percent this year, after a 9.7 percent jump in 2012, as the central bank and the government increased dollar purchases to ease the local currency’s rally. Banco de la Republica said Jan. 28 it will buy a minimum of $30 million a day, bringing purchases in the foreign-exchange market to at least $3 billion from February to May.
Policy makers will probably extend the bank’s dollar purchase program to September at tomorrow’s meeting, Ramirez predicted. They will leave the overnight lending rate unchanged at 3.25 percent, according to 19 of 31 economists surveyed by Bloomberg. Twelve expect a cut of 25 basis points.
Cardenas, who is also president of the central bank’s board and has one of seven votes, said in an interview today that he favors maintaining the pace of dollar purchases.
The yield on Colombia’s benchmark bonds due in July 2024 rose one basis point, or 0.01 percentage point, to 4.85 percent, according to the central bank.