Colombia Peso Weakens Toward All-Time Low as Crude Oil Nears $30

  • Peso had gained from Dec. 14 low of 3,378 on Isagen sale plans
  • Brent oil fell to lowest since April 2004 before paring losses

The Colombia peso weakened past 3,300 per dollar for the first time in two weeks as the drop in prices for oil, the nation’s biggest export, damped the outlook for dollar inflows.

The peso fell 0.7 percent to 3,279.9 per dollar at the close in Bogota after reaching as low as 3,315.73. The currency has fallen 3.2 percent this week, paring gains it made in the final weeks of December as the government set Jan. 13 as the date it will auction its majority stake in utility Isagen SA, which should raise at least $2 billion.

The country needs dollar flows to help reverse a current account gap that the IMF estimates expanded to 6.2 percent in 2015, the widest since at least 1980. The peso tumbled 25 percent last year, the fourth-worst performance in emerging markets.

“Oil is outweighing the potential sale of Isagen,” Daniel Velandia, the head analyst at Credicorp Capital’s Colombia unit, said from Bogota. “Colombia continues to be one of the most punished amid concern over its fiscal account and current account.”

Brent for February settlement fell as much as $2.07 to $32.16 a barrel on the London-based ICE Futures Europe exchange, the lowest since April 2004.

Colombia’s sale of its majority stake in power company Isagen next week is just the start of a process of optimizing state assets as the country confronts a “new reality” of lower oil prices and a weaker currency, Finance Minister Mauricio Cardenas said during an interview Wednesday in Miami.

A “serious risk is that the auction may again be blocked,” according to an e-mailed report by Citigroup analysts on Wednesday. The government’s sale process, which was announced in 2013, has been blocked for several months as the state council ruled on cases. The court cleared the way for the sale in September.

There isn’t any legal obstacle to the sale, and the legality of the process has been confirmed by the state council, according to a statement from the presidency. To comply with the deadline in the council’s last decision, the auction must be held no later than Jan. 13, according to the statement.

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