Colombian Peso Strengthens After Stimulus Plan; Bond Yields Rise

Colombia’s peso rose for the first time in five days on speculation measures announced by the government won’t be enough to ease gains in the currency.

The peso appreciated as much as 0.3 percent to 1,829.70 per U.S. dollar before closing little changed at 1,833.65 in Bogota trading. The currency, which strengthened 9.7 percent in 2012, has dropped 3.6 percent this year.

Colombia yesterday said it will adjust rules on risk and profitability governing pension funds in a bid to weaken the peso by encouraging them to invest more abroad. The changes are part of the stimulus plan Finance Minister Mauricio Cardenas had said at the beginning of this month the government would announce that included currency measures.

“Hopes were high and it was hard to deliver after so much speculation on what currency measures would be taken,” said Camilo Perez, the head analyst at Banco de Bogota SA, the country’s second-biggest bank.

The 5 trillion-peso ($2.7 billion) stimulus package, called the “Plan to Boost Productivity and Employment,” also includes subsidized mortgage credit, lower energy costs, an expansion of a housing program for low income families. It won’t have a fiscal impact given the government’s savings in debt issuance as borrowing costs fall, according to a statement yesterday from the Finance Ministry.

Yields on Colombia’s peso bonds maturing in 2024 fell three basis points, or 0.03 percentage point, to 4.99 percent, according to the central bank.

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