Colombia Currency Holds Within Peso of Week Low on Dollar Buying
Colombia’s currency held within a peso of a week low after the government said last week it will buy $1 billion more to help exporters by easing gains in the local exchange rate.
The peso was little changed at 1,790.88 per U.S. dollar after closing yesterday at 1,791.57, the weakest since Feb. 7. The currency has dropped 1.3 percent this year as the government and central bank announced increased dollar purchases to stem a rally that sent the peso to a 17-month intraday high on Jan. 2.
Finance Minister Mauricio Cardenas said Feb. 13 the government will buy $1 billion to pay for interest and principal on foreign bonds coming due this year, helping to weaken the peso. The government said last month that it would purchase the same amount for its oil stability fund.
“The dollar purchase announcements are having an impact on the market,” Daniel Escobar, the head analyst at Global Securities brokerage in Bogota, said in a phone interview. “It will probably be short-lived.”
The central bank said Jan. 28 it will buy at least $30 million a day, bringing purchases in the foreign-exchange market to $3 billion from February to May. A stronger peso curbs exporters’ profits.
Yields on Colombia’s peso-denominated bonds due in 2024 were little changed at 5.02 percent as Cardenas, who is also president of the central bank’s board, said in an interview on RCN Radio today that the government wants lower interest rates.
The yields have fallen 17 basis points since Feb. 5, when a report showed annual inflation slowed to 2 percent in January, the lowest level since April 2010 and at the bottom of the central bank’s preferred range. Policy makers will reduce the 4 percent target rate by 25 basis points on Feb. 22, according to 22 of 24 economists surveyed by Bloomberg. Two forecast the rate will hold steady.
To contact the reporter on this story: Andrea Jaramillo in Bogota at email@example.com
To contact the editor responsible for this story: David Papadopoulos at firstname.lastname@example.org