Bearish Citigroup Outlook Sinks Colombian Peso Amid Oil Plunge

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Colombia’s peso led global currency declines as a drop in oil prompted bearish forecasts from Citigroup Inc., Nomura Holdings Inc. and Standard Chartered Plc.

The peso fell 2.2 percent to 2,486.50 per U.S. dollar at the close in Bogota, the worst performance among 31 major currencies tracked by Bloomberg. The slide was the biggest since Jan. 5.

Citigroup strategists Dirk Willer and Kenneth Lam said in a research note that the Colombian currency will fare worse than Mexico’s peso as oil, the nation’s biggest export, falls and the current-account deficit widens. Nomura and Standard Chartered also recommended that clients bet on a further slump in the Colombian peso.

“A renewed fall in oil prices would not bode well” for the Colombian peso, Willer and Lam wrote. “The fundamentals for Colombia are also quite poor.”

Colombia’s peso also dropped as a court’s suspension of the sale of the government’s stake in power producer Isagen SA reduced projected inflows, Nomura strategist Mario Castro wrote. He recommends using three-month non-deliverable forwards to bet the dollar will gain against the peso. Standard Chartered sees the Chilean currency rallying against its Colombian counterpart.

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