• Policy maker says models show peso stronger than equilibrium
  • Peso has tumbled with oil, Colombia's biggest export

Colombia’s peso led emerging market gains, buoyed by optimism over the outlook for oil prices, while a central bank policy maker said that the currency may be overvalued by some measures.

The peso strengthened 1.7 percent to 3,318.05 per dollar at 11:34 a.m. in Bogota as oil fluctuated between gains and losses after crude jumped 8 percent Wednesday. Signs that the price of energy is stabilizing would be a boon to a country that gets about 40 percent of its export revenue from oil.

The peso has tumbled 25 percent over the past year as the drop in crude prices helped send the country’s current account deficit, the broadest measure of trade in goods and services, to the highest in at least 30 years. Carlos Gustavo Cano, a co-director at Colombia’s central bank, said Wednesday that models used by policy makers show the currency is still 5.3 percent stronger than “equilibrium.”

“The real exchange rate, according to our models, is still slightly overvalued,” Cano said in a presentation an an event Wednesday in Bogota.

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