Colombia Peso Rallies on Eased Fed Concern, Pension Rule Delay

Colombia’s peso rose the most since November as a slowdown in U.S. retail sales eased concern that the Federal Reserve will slow bond buying that has boosted demand for emerging-market securities.

The currency gained 0.9 percent to 1,886.98 per U.S. dollar today, extending its gain in the past five days to 2.1 percent, the most among major Latin America currencies.

The peso has beaten its peers since Finance Minister Mauricio Cardenas said last week that the government will delay a rule encouraging pension funds to shift assets abroad. U.S. retail sales rose 0.4 percent last month, half as fast as economists predicted, boosting speculation Fed Chairman Ben S. Bernanke will tone down talk of ending stimulus when he addresses Congress on July 17-18.

“The whole of emerging markets rallied today,” said Alejandro Cuadrado, a currency strategist at Banco Bilbao Vizcaya Argentaria SA in New York, who recommends that investors buy the peso after the pension fund rule was shelved. “We’re positive in the short term, but today was almost too much of a move. We have to be careful. We favored the peso but weren’t looking for a massive rally.”

The pension fund rule change might have resulted in $5 billion of assets moving out of Colombian pesos, Cuadrado said.

Strategists at Nomura Holdings Inc. today also recommended taking short-term positions in the Colombian peso.

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