Colombia Currency Rises on View Intervention Won’t Curb Advance
Colombia’s peso rose to a one-week high on speculation more dollar purchases announced by the central bank won’t curb a four-year rally that is making exporters less competitive.
The peso gained for a second day, appreciating 0.1 percent to 1,771.70 per dollar at 10:11 a.m. in Bogota, the highest level on a closing basis since Jan. 21. The currency pared its monthly drop to 0.3 percent.
The central bank will buy at least $30 million daily and purchase at least $3 billion between February and May, officials announced Jan. 28. The vote to step up dollar purchases was unanimous, central bank Governor Jose Dario Uribe said today in an interview with Javeriana Radio.
“The market considers that it won’t be enough,” Daniel Escobar, the head analyst at Global Securities in Bogota, said by telephone. “Investors for now don’t feel like the intervention is very strong.”
Finance Minister Mauricio Cardenas said yesterday in an interview with CM& Television that Colombia doesn’t rule out using capital controls to weaken the peso.
“We don’t like capital controls, we aren’t thinking of using them at the moment, but this option is always on hand, it’s always a possibility,” Cardenas said. “Because one thing we are clear about is that the Colombian economy doesn’t need an exchange rate of 1,770 per dollar.”
Yields on the government’s 10 percent peso-denominated debt due in 2024 rose one basis point, or 0.01 percentage point, to 5.27 percent, according to the central bank. The price fell 0.123 centavo to 139.914 centavos per peso. Yields closed at 5.23 percent on Jan. 25, the lowest level since the securities were first issued in 2009.
Banco de la Republica reduced its benchmark rate by a quarter-percentage point to 4 percent on Jan. 28 to support economic growth.
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