Colombia Peso Falls on Concern Inflows May Be Less Than Expected

Colombia’s peso fell the most since August on speculation investors overestimated the amount of foreign investment flows coming into the Andean country.

The peso depreciated 0.6 percent to 1,777.70 per U.S. dollar at the close of trading in Bogota, the biggest drop since Aug. 15. The peso reached 1,750.50 on Jan. 2, the strongest intraday level since July 2011.

“People are realizing the move we saw earlier this year in the peso was exaggerated,” Camilo Perez, the head analyst at Banco de Bogota SA, the country’s second-biggest bank, said in a phone interview from Bogota. “So far we haven’t been seeing the strong inflows that justified the rally.”

Finance Minister Mauricio Cardenas told reporters last week that the government will use “all its ammunition” to stem gains in the peso, which are making the nation’s coffee, flower and banana exporters less competitive. He ruled out capital controls, which he said aren’t effective.

The yield on Colombia’s 10 percent peso-denominated debt due in 2024 fell one basis point, or 0.01 percentage point, to 5.29 percent, according to the central bank. That is the lowest level on a closing basis since the government began issuing the securities in 2009.

Colombia sold $1 billion of 10-year dollar bonds today to yield 2.718 percent, Public Credit Director Maria Fernanda Suarez said in an interview. Investor demand was more than three times the amount offered, she said. Deutsche Bank AG and Goldman Sachs Group Inc. managed the sale.

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