- Crude, the country's biggest export, trades at 12-year low
- Cenbank co-director says current account is vulnerable point
Colombia’s peso sank to a record as the rout in oil dimmed the outlook for the nation’s current-account deficit, which was dubbed the country’s “Achilles heel” by a central banker.
The currency weakened 2.5 percent to 3,395 per dollar at the close in Bogota, the worst performer after the Russian ruble among 31 major currencies tracked by Bloomberg. It touched as low at 3,406.5 in intraday trading, falling past the previous record of 3,377.85 reached last month.
Finance Minister Mauricio Cardenas said Monday that Colombia’s current-account deficit, already forecast to be the highest in at least three decades, may last longer than expected if oil stays near $30 a barrel. There’s also concern that the government will delay new tax rules after Cardenas said in a radio interview on Tuesday that Colombia has to study proposals and declined to say when the government would send a bill to Congress. Cardenas had previously said that a bill would be presented in March.
“Oil is as always the key driver," said Daniel Escobar, head analyst at Global Securities in Bogota. "The tax reform is also starting to become a concern. Delaying it would not send a good signal to the market. Colombia needs a tax bill that will help balance its budget in the next few years."
Oil, Colombia’s biggest export, extended its decline from the lowest close in more than 12 years ahead of weekly U.S. government data that’s forecast to show an expansion in crude stockpiles, exacerbating a global glut. Crude is down more than 25 percent this year amid volatility in Chinese markets and speculation the removal of restrictions that capped Iran’s oil sales will help to prolong a worldwide oversupply.
Colombia’s current-account deficit, the broadest measure of trade in goods and services, widened to $5.25 billion in the third quarter, compared with estimates for a $4.9 billion gap, and was called an “Achilles heel” by central bank co-director Carlos Gustavo Cano in a presentation posted on the institution’s website Jan. 15.