Colombian Peso Weakens to Three-Month Low as Oil Extends Declineby
Crude oil declines as OPEC ministers gather for policy meeting
Peso at weakest since Sept. 2; biggest decline among peers
Colombia’s peso fell to a three-month low as oil plunged while ministers from the Organization of Petroleum Exporting Countries gather in Vienna to discuss production policy.
Oil, which makes up about 40 percent of Colombia’s exports, fell 4 percent Wednesday in New York, extending its decline in the past month to 13 percent. Crude has slumped about 40 percent since Saudi Arabia led OPEC’s decision a year ago to maintain output and defend market share against higher-cost shale producers.
Lower crude prices threaten to swell the country’s current account deficit, the broadest measure of the trade in goods and services. The gap widened to 5.2 percent of gross domestic product last year, according to the International Monetary Fund. It’s forecast to expand to 6.2 percent this year, the most since at least 1980, according to IMF estimates.
“Obviously oil isn’t helping, it’s fallen a lot,” said Mario Castro, a strategist at Nomura Holdings Inc. in New York. “All of the economic fundamentals show that the peso should depreciate more, and quickly, especially the current account deficit.”
The peso fell 1.2 percent to 3,163.04 pesos per dollar Wednesday in Bogota, the biggest drop among the world’s 31 most-traded currencies. The currency has weakened 25 percent this year, pushing up the cost of imports. Inflation in Colombia accelerated to 6.28 percent last month, the fastest since 2009, according to the median forecast of 21 economists surveyed by Bloomberg.