- Currency falls after strengthening past 3,000 last week
- Oil, country's main export, near $37 after falling on Friday
Colombia’s currency extended its retreat from a four-month high, curbing a rally that policy makers were counting on to help reduce inflation.
The peso fell 1 percent to 3,068.78 per dollar at 9:11 a.m. in Bogota, weakening for a second day after it strengthened past the 3,000 level on March 31. It was the biggest drop among 31 major currencies tracked by Bloomberg. The Brazilian real and Mexican peso also slipped as a 10-week, 9.1 percent rally in emerging-market currencies faded.
Oil, Colombia’s biggest export, traded close to a one-month low after Saudi Arabia’s deputy crown prince said the country would freeze output only if Iran does too, casting doubt on a deal between the two countries. The rally in oil had supported an 8 percent gain in the Colombian peso over the past two months, which had prompted Colombian Finance Minister Mauricio Cardenas to say that a peso around 3,000 would help relieve inflation. The cost of living in Colombia is rising at the fastest pace since 2008.
“Quite apart from the rally there has been in recent weeks, all the risks still point to depreciation,” said Mario Castro, a strategist at Nomura Holdings Inc. in New York.
March inflation is forecast to reach to 7.7 percent, which would be the fastest since 2001. Colombia is scheduled to report monthly inflation data on Tuesday.