Colombian Peso Leads Global Gains as Oil Volatility Fuels Swings

  • Peso is the emerging-market currency most correlated to oil
  • Businesses hold off on trading currency amid rising volatility

Colombia’s peso led global gains as oil, the nation’s biggest export, rallied on optimism that faster economic growth will fuel demand.

The peso jumped 2.1 percent to 3,108.73 per dollar, the most among 31 major currencies tracked by Bloomberg. The currency has rallied 4.9 percent since Aug. 26 as oil surged 22 percent, recovering from a six-year low.

Rising volatility in the peso has led to lower trading volume and exaggerated swings in the currency, said Juan Pablo Espinosa, the head analyst at Bancolombia, the nation’s biggest bank. One-month implied volatility on peso options, reflecting projected shifts in the exchange rate, jumped to 24 percent Thursday, the highest among major currencies after Russia’s ruble.

"The peso has been tracking oil, following its ups and downs," Espinosa said from Bogota. "With so much fluctuation, businesses postpone their need to buy or sell dollars. The uncertainty is so high."

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