Colombia Peso Jumps Most in One Week; Yields Fall

Colombia’s peso rose the most in a week as companies bought the local currency to pay taxes and amid gains in oil, the country’s biggest export.

The peso appreciated 0.3 percent to 1,763.30 per U.S. dollar and earlier strengthened 0.5 percent for its biggest intraday increase since Jan. 2. It touched 1,750.50 that day, the strongest intraday level since July 2011.

“We’re seeing strong sales of dollars by companies, and that should continue to pressure gains in the peso this quarter,” Juan Pablo Colmenares, a currency trader at Corp. Financiera Colombiana, said in a phone interview in Bogota. “Oil is also helping in addition to investments we should see this year from oil companies in Colombia.”

Agriculture Minister Juan Camilo Restrepo called on the central bank yesterday to boost dollar purchases to ease gains in the local currency that are hurting coffee, flower and banana exporters. On Jan. 2, central bank Governor Jose Dario Uribe said on RCN Radio that the peso’s strength is a concern and reiterated that Banco de la Republica will buy a minimum of $20 million a day through at least the first quarter. The central bank printed pesos to buy a record $4.4 billion last year.

The peso will probably strengthen to 1,750 next week, according to Colmenares, a level where investors see increased chances of further measures by policy makers to stem gains.

Oil rose to its highest level in three months after China’s exports topped estimates, boosting speculation a strengthening economy will drive demand. Oil accounts for about 40 percent of Colombia’s sales abroad.

The yield on 10 percent peso-denominated debt due in July 2024 dropped five basis points, or 0.05 percentage point, to 5.47 percent, the lowest since the securities were first issued in 2009, according to the central bank. The price rose 0.526 centavo to 137.953 centavos per peso.

Before it's here, it's on the Bloomberg Terminal.