Colombian Currency Drops to Five-Year Low as Oil Prices TumbleAndrea Jaramillo
Colombia’s peso fell to its lowest level since July 2009 amid a plunge in the price of crude oil, the Andean nation’s biggest export.
The currency sank 0.6 percent to 2,076.10 per U.S. dollar at the close in Bogota, extending its decline over the past three months to 9.3 percent. Today’s drop was the biggest among 24 emerging-market currencies tracked by Bloomberg.
A 25 percent decline in Brent crude oil prices this year comes as Colombian rebel attacks on pipelines and community protests reduce output for the first time in almost a decade. Oil accounts for more than half of the nation’s exports.
The “principal sources of dollar inflows into the country are moderating,” Mario Castro, a strategist at Nomura Holdings Inc., said in a research report.
The Colombian peso will extend its decline and act as an “automatic stabilizer” for the economy by partially absorbing the negative shock from lower oil prices and terms of trade, Castro wrote. He recommends betting the peso will weaken to 2,165 per U.S. dollar.
West Texas Intermediate crude dropped to a three-year low and Brent touched a four-year low today as Saudi Arabia cut prices for exports to U.S. customers amid speculation stockpiles increased last week.