Colombian Peso Depreciates as Cardenas Signals More Intervention

Colombia’s peso fell for the first time in four days as Finance Minister Mauricio Cardenas said the government is considering additional measures to stem gains in the currency.

The peso dropped 0.4 percent to 1,820.50 per U.S. dollar at the close of trading in Bogota. The currency has appreciated 24 percent since the beginning of 2009.

Cardenas said today in Bogota that the peso’s rally is the “mother of all the problems,” making agricultural and industrial exports less competitive. The government is working on a plan to help revive growth that includes currency intervention and excludes capital controls because they “are not effective,” he said yesterday.

“Cardenas has the market pretty scared, although frankly it’s not clear what other currency measures they can take,” said Camilo Perez, the head analyst at Banco de Bogota SA, the nation’s second-biggest bank.

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. 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.

President Juan Manuel Santos will present the government’s plan to revive growth on April 15, according to Cardenas.

Bond Auctions

Yields on peso bonds maturing in 2024 climbed 11 basis points, or 0.11 percentage point, to 5.14 percent, according to the central bank. The price fell 1.181 centavo to 140.8510 centavos per peso.

Colombia increased the amount of peso bonds, known as TES, it will auction weekly after it sold less than planned through non-competitive offerings, Juan Manuel Quintero, the head of local debt sales at the Finance Ministry, said in phone interview today. The plan to auction 23 trillion pesos ($12.6 billion) in TES this year remains unchanged, he said.

The government will offer 600 billion pesos of fixed-rate TES bonds in its weekly sale, up from 400 billion pesos, Quintero said. It will auction 300 billion of inflation-linked TES UVR bonds, up from 200 billion pesos, he said.

Yields on the benchmark bonds due in 2024 have risen 24 basis points this week as investors pared bets the central bank will lower the benchmark overnight lending rate further after an unexpected 50 basis point cut on March 22.

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