Peso Drops on Bets Colombia Will Buy More Dollars

Colombia’s peso fell to its lowest level this month on speculation the government will move to weaken the currency after it touched a 17-month high this month.

The peso depreciated 0.2 percent to 1,774.03 per U.S. dollar, paring its rally over the past month to 1.3 percent. The peso reached an intraday high of 1,750.50 on Jan. 2, the strongest since July 2011.

Finance Minister Mauricio Cardenas said in an interview yesterday that he saw no reason for the peso to strengthen so much over the past month and that he would like to see the central bank step up dollar purchases after it bought a record $4.8 billion last year. Central Bank Governor Jose Dario Uribe said on RCN Radio yesterday that policy makers believe Colombia would benefit from a weaker currency.

“The market is betting on an increased intervention and that that will weaken the peso in the short term,” Daniel Lozano, the head analyst at brokerage Serfinco SA, said in a phone interview in Bogota.

The yield on Colombia’s 10 percent peso-denominated debt due in July 2024 fell 11 basis points, or 0.11 percentage point, to 5.36 percent, the lowest since the securities were first issued in 2009, according to the central bank. The bond’s price jumped 1.15 centavos to 139.111 centavos per peso.

The government sold today peso bonds due in April 2028 to yield 5.62 percent, according to a statement from the finance ministry, down from 5.79 percent a week earlier.

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