Bloomberg News

Colombia Peso Drops From One-Week High on U.S. Economy Concern

June 22, 2011

June 22 (Bloomberg) -- Colombia’s peso retreated from a one-week high on speculation the flagging U.S. economic recovery will damp investment into the Latin American economy.

The peso was little changed at 1,780.15 per dollar by the close of trading at 2 p.m. New York time. It earlier touched 1,776.85, the strongest level since June 15.

The recovery of the U.S. economy is continuing “more slowly” than the Federal Reserve expected, the Fed Open Market Committee said in a statement today after agreeing to maintain record monetary stimulus. Foreign investment into Colombia, which counts the U.S. as its largest trading partner, rose to $5.75 billion this year through May, from $3.68 billion in the same period of 2010, according to central bank data.

“Investors are being very cautious,” Carlos Torres, head analyst at brokerage Asesores en Valores SA in the Colombian capital, Bogota, said by phone. “While Colombia’s fundamentals point to a stronger peso, concern over U.S. growth,” is limiting gains in the currency today, Torres said.

Investment from the U.S. has helped the peso strengthen 7.2 percent this year, the biggest advance among the seven most- traded currencies in Latin America, according to data compiled by Bloomberg. Mexico’s peso, the second-best performer, added 4.6 percent versus the dollar in the same period.

Fitch Ratings upgraded Colombia’s credit rating today to BBB-, the agency’s lowest investment grade. Moody’s Investors Service raised Colombia to Baa3, its lowest investment grade ranking, on May 31. Fitch’s announcement came after Colombia’s currency and local bond markets closed.

Colombia’s peso-denominated bonds due July 2024 rose today, pushing the yield one basis point, or 0.01 percentage point, lower to 7.81 percent, according to prices from the country’s stock exchange.

--Editors: Emma O’Brien, Richard Richtmyer

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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