- Currency recovers from worst of losses as Brexit odds decline
- Peso still down as Colombia boosts its fiscal deficit target
The Colombian peso led losses among emerging-market currencies amid concern the U.K. will vote to leave the European Union and after the Latin American nation increased its fiscal deficit target. The currency pared its drop as bets on a so-called Brexit decreased.
The peso retreated 1.3 percent to 3,015.95 per dollar on Thursday in Bogota, after slumping as much as 1.9 percent. The currency, which posted its biggest slide since May 13, has gained 5.3 percent this year.
The rebound in the peso came as a survey of oddsmakers showed a drop in the implied probability that Britons would vote to leave the EU to below 39, after it surpassed 44 hours earlier. Emerging markets such as Colombia are vulnerable because a victory for the “Leave” campaign could trigger a flight to safer assets.
The Brexit talks are “increasing volatility in all sorts of assets,” Camilo Perez, an economist at Banco de Bogota. said by phone.
The peso’s drop was compounded by foreign investors selling local government bonds after the government this week increased the target for this year’s fiscal deficit to 3.9 percent of gross domestic product from 3.6 percent to account for the fall in the price of oil, the country’s main export, Perez said. Oil tumbled a sixth day in New York as concerns mounted that the world economy is losing strength.