Colombia Peso Volatility Rises to 10-Week High Before Stimulus

Volatility in Colombia’s peso increased to a 10-week high as the government prepared to release a stimulus plan that Finance Minister Mauricio Cardenas has said includes measures to stem the currency’s gains.

One-month historical volatility, a gauge of the magnitude of the peso’s fluctuations over the period, is at the highest level since Jan. 30, according to data compiled by Bloomberg. The currency, which strengthened 9.7 percent in 2012, has dropped 2.9 percent this year. It fell 0.3 percent to 1,819.70 per U.S. dollar at the close of trading in Bogota.

Colombia needs a more competitive exchange rate, Cardenas reiterated yesterday. President Juan Manuel Santos will present a plan April 15 to help agricultural and industrial exporters that have been hurt by a stronger peso, Cardenas said April 3. He told lawmakers April 2 that he expects the peso to weaken to 1,900 and wants to “get there quickly.”

“The market has become pretty sensitive to the government’s comments” on the peso, said Daniel Velandia, the head economist at Credicorp Capital’s Colombia unit, previously known as Correval. “That’s injecting a lot of volatility to the market.”

Yields on Colombia’s peso bonds maturing in 2024 fell one basis point, or 0.01 percentage point, to 4.98 percent, according to the central bank. The price rose 0.1 centavo to 142.511 centavos per peso.

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