Colombia’s peso posted its biggest weekly decline since May 2012, prompting Finance Minister Mauricio Cardenas to say yesterday that the government may wind down its foreign-exchange intervention.
The currency plunged 2.9 percent this week to 1,937.30 per U.S. dollar at the close of trading in Bogota. It rose 0.1 percent today. The peso sank this week after the Federal Reserve said on June 19 that it may phase out a stimulus program that has boosted emerging-market assets. It has fallen 8.8 percent this year, the biggest decline after the South African rand among 24 emerging-market dollar counterparts tracked by Bloomberg.
Cardenas said yesterday in Bogota that “‘we already have done our job’’ as the peso plunged toward 1,950, which he has called the ‘‘equilibrium rate.’’ U.S. Treasury 10-year note yields rose to 2.5 percent today for the first time in almost two years after Fed Chairman Ben S. Bernanke said June 19 that policy makers may end $85 billion in monthly bond purchases under quantitative easing in mid-2014.
‘‘You had big inflows into emerging markets because of quantitative easing,’’ Bernd Berg, an emerging-market strategist at Credit Suisse Group AG in Zurich, said in a telephone interview. ‘‘Now you have yields rising in the U.S.’’ Berg said the Colombian peso will weaken to 2,000 by the end of the third quarter, compared with a previous forecast of 1,780. He predicts the peso will trade at 1,970 in a year, weaker than a previously forecast 1,835.
Yields on benchmark Colombian peso bonds due in July 2024 rose 10 basis points to 7 percent, a one-year high, according to the stock exchange. Yields increased 63 basis points this week.