Colombia Peso Reverses Losses as Intervention Trigger Eyedby
Policy makers cut threshold for dollar auctions in February
Peso earlier fell to level that was close to triggering sale
Colombia’s peso reversed losses after approaching levels that could have triggered the central bank to sell dollars for the first time under a program announced in October.
The peso gained 0.5 percent to 3,012.85 per U.S. dollar at 1:22 p.m. in Bogota, reversing losses after earlier dropping to a one-month low. The peso has dropped 5.4 percent this month along with declines in the Mexican and Chilean pesos.
The peso rose as oil climbed to a seven-month high on speculation of declining U.S. stockpiles. The central bank hasn’t sold dollars under the intervention mechanism first announced at its October meeting to reduce volatility in the peso. Policy makers said in February they will auction foreign-exchange call options when the official exchange rate weakens 3 percent or more from the 20-day moving average, down from a previous level of 5 percent.
The peso’s loss earlier this morning made it seem like it was on path to trigger the dollar auctions, said Camilo Perez, the head analyst at Banco de Bogota. The official exchange rate known as the TRM would have to reach 3,025.6 to trigger an intervention, Perez said.
The peso has tumbled 20 percent in the past 12 months, helping fuel inflation to a 15-year high in March.