Colombia Peso Declines as Santos Calls for More Intervention
Colombia’s peso fell the most in two weeks as President Juan Manuel Santos asked central bankers to find new ways to ease the currency’s gains.
The peso dropped 0.4 percent to 1,806.20 per U.S. dollar at the close of trading in Bogota, the most since Feb. 25. It’s down 0.3 percent this week.
Santos said yesterday at the swearing-in ceremony of central bank board members Ana Fernanda Maiguashca and Adolfo Meisel that he wants them to “bring new light to how we can be more creative” in stemming the peso’s rally, which erodes exporters’ profit margins. The peso gained 9.7 percent in 2012 and touched a 17-month high on Jan. 2, prompting policy makers to increase dollar purchases in the foreign-exchange market. It has since weakened 2.4 percent.
“The market is on the lookout for what will be discussed in terms of currency intervention” in the March 22 monetary policy meeting, said Sebastian Martinez, an analyst at Helm Bank in Bogota. “They probably won’t announce anything concrete given the dollar purchase program runs through May, but people will be watching for what they have to say.”
The central bank said Jan. 28 that it will buy at least $30 million a day, bringing purchases in the foreign-exchange market to $3 billion between February and May. Finance Minister Mauricio Cardenas has also said that the government will buy $1 billion to pay for interest and principal on foreign bonds coming due this year, in addition to the $1 billion it will purchase for its oil-stability fund.
Banco de la Republica will lower the overnight lending rate a quarter percentage point to 3.5 percent at this month’s meeting, according to the majority of analysts surveyed by Bloomberg.
Yields on Colombia’s benchmark peso bonds due 2024 were little changed today at 4.92 percent, according to the central bank.
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