Colombia’s peso climbed to a two-month high as oil, the South American nation’s biggest export, traded near its highest price this year.
The peso’s 1.7 percent jump was the biggest globally among 31 major currencies tracked by Bloomberg and extended its gain this month to 7.8 percent, the biggest since 2009. At 2,412.45 per dollar at the close in Bogota, the peso closed at its strongest level since Feb. 16.
“The sentiment toward Colombia has improved since oil started gaining,” Daniel Velandia, the head analyst at Credicorp Capital’s Colombia unit, said in an interview from Bogota. “Investors are more optimistic, and there is a sense foreigners are coming back into Colombia’s stocks and bonds.”
Oil, which accounts for more than half of the nation’s exports, reached a five-month high last week on speculation Saudi Arabia’s military campaign in Yemen will disrupt Middle East supplies. The peso has gained in recent days as companies in Colombia with foreign operations brought in dollars and exchanged them for local currency to pay taxes, Velandia said.
A rally this month in the nation’s benchmark peso bonds due in July 2024 has pushed yields down 0.28 percentage point to 6.7 percent. The Colcap equity index is up 6.9 percent.
Colombia’s central bank board voted unanimously Friday to hold the target lending rate at 4.5 percent for an eighth straight month. The fastest inflation since 2009 has discouraged policy makers from cutting borrowing costs as economic growth slows.